Chinese investment goes global: the China Investment Corporation

Pages9-15
DOIhttps://doi.org/10.1108/13581980910934009
Date20 February 2009
Publication Date20 February 2009
AuthorCharlie Cai,Iain Clacher
SubjectAccounting & finance
Chinese investment goes global:
the China Investment Corporation
Charlie Cai and Iain Clacher
University of Leeds, Leeds, UK
Abstract
Purpose – The purpose of this paper is to provide a detailed overview of the China Investment
Corporation (CIC) and its structure, investment activities and possible future investments.
Design/methodology/approach – This paper uses a case study approach and builds up a picture
of sovereign wealth globally and then focuses on the CIC and issues surrounding the fund.
Findings – The key implications from the research are that Asian sovereign wealth is going to be
increasingly important in global investment. The CICs investment strategy is evolving and becoming
evermore sophisticated. As the fund grows this will result in increased demand for local financial
services and expertise and so where representative offices are located will impact on those financial
centers.
Research limitations/implications – Future research should expand the scope of the analysis to
include other sovereign wealth funds and try to map out a comprehensive picture of sovereign wealth
around the world.
Originality/value – This is one of the first papers to look at sovereign wealth and is believed to be
the first paper to analyze Asian sovereign wealth and the CIC.
Keywords Investment funds,International investments, Financial institutions,China, Protectionism
Paper type Case study
An overview of the China Investment Corporation and global sovereign
wealth
The $200bn China Investment Corporation (CIC) was established in 2007 and is
currently the 6th largest sovereign fund in the world by total assets. However, since its
inception the fund has been controversial and the focus of much of the ongoing political
debate about the nature of sovereign wealth fund investments. However, from Table I
it is clear that the Abu Dhabi Investment Authority is the largest sovereign fund with
total assets of $875bn. Of the top ten sovereign wealth funds, 70 per cent are from oil
rich nations while the other 30 per cent are funded from non-commodity sources.
Interestingly, the three funds that have large non-commodity surpluses are the
Asian funds.
To put Asian sovereign wealth into a wider context, it accounts for approximately
24 per cent of the total value of the top ten sovereign wealth funds. With total assets of
approximately $638bn, Asian sovereign wealth is considerably less than the
Abu Dhabi Investment Authority ($875bn). Further, the size of CIC relative to the total
value of the assets in the top ten funds is even smaller at just 7.8 per cent.
Currently, sovereign wealth funds globally are worth an estimated $3.3 trillion.
This money is, at present, concentrated in the Middle East as a result of trade
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
This paper is based on a thematic case study that the authors wrote for a report on Asian
Financial Centres for the City of London, The Future of Asian Financial Centres – Challenges
and Opportunities for the City of London, October 2008.
Chinese
investment goes
global
9
Journal of Financial Regulation and
Compliance
Vol. 17 No. 1, 2009
pp. 9-15
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980910934009

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