China Investment Corporation speculation
China Investment Corporation (CIC) is a Chinese sovereign
wealth fund (SWF), which is a state-owned investment fund.
Lou Jiwei, who is still listed as chairman of CIC,
became minister of finance,
but his successor of CIC hasn’t been formally appointed.
This has aroused outsiders’ speculation.
Media in Hong Kong reported that the Chinese Communist
Party’s (CCP) high-level power struggle is the leading cause of the present vacancy for CIC’s chairman.
However, analysts say that CIC’s existing problems
are very serious, thus no one wants to clean up the mess.
CIC was established in Beijing in 2007. It was a state-owned
SWF under approval of the State Council.
CIC’s funds come from China’s foreign reserves. Lou Jiwei
served as chairman and chief executive officer at that time.
In March, Lou was promoted to China’s finance minister.
Lou’s successor of CIC hasn’t been appointed yet.
Sources said that the new CIC chairman appointment
could take several months.
Hua Po, Beijing current affairs observer, believes that
serious problems exist within CIC.
Earnings and losses are shrouded in mystery.
Thus, one will be afraid of a time bomb detonating
during their tenure.
No one dares to take the CIC’s Chairman position.
Hua Po: “The competition is fierce, because numerous
shady scenes exist inside CIC.
Many interest groups are represented inside and thus
all problematic aspects are involved.
They were also worried that if a representative of another
interest group takes the lead role, its dark side will be exposed.
This is the problem that they also considered.”
Media revealed that CIC has many investment losses. Since
2007, the CCP has frequently lost on overseas investments.
CIC has US$200 billion registered equity capital.
At the end of 2008, CIC lost US$6 billion in Morgan Stanley
and Blackstone Group investments.
Apart from this, after the financial crisis in 2008, it was said
that CIC suffered heavy losses on unidentified confidential
properties and private equity investments, of which the exact
figures are hard for outsiders to be in the know about.
On May 27, Hong Kong’s South China Morning Post
published the article, “Beijing’s power struggle results in CIC’s leader vacancy.”
Sources said that several leaders in the State Council expected
Gao Xiqing, the current Vice Chairman and Chief Investment Officer of CIC to take over following Lou Jiwei’s departure.
It was said that the fact that Gao had studied abroad
may hinder him from taking the role.
Hua Po said that he is reluctant to believe this reason,
as many CCP leaders had been abroad to study.
Hua Po: “The high-level CCP hopes to appoint outsiders
to mange CIC, as the CCP wants to break through
the current situation of interests and relationships.
I think the high-level has a designated candidate.
They want to wipe away the entire mess, thus the CCP
is unwilling to appoint the current vice chairman to take over for Lou.”
Jiang Lijun, head of China’s Economic and Society
Development Strategy Research Center, said that it is chaotic.
Any one who takes over the role will be held accountable.
Thus no one wants it.
Jiang Lijun: “No one wants to take the lead of the so-called
state-owned enterprises such as this.
Soon, large banks, and so-called investment companies
will have the same outcome.
China’s economy has now nearly reached collapse,
it gets worse and worse step by step. It is inevitable.”
Prior to this, several media reported that Tu Guangshao,
the executive vice mayor of Shanghai, will be the successor of CIC.
On May 24, Sina Caijing website cited sources saying that Tu
will remain in Shanghai and doesn’t want to accept the CIC role.
Media pointed out that Tu is following Yi Gang, vice governor
of Peoples Bank of China, who turned down the CIC chairman position.