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China's Sovereign Wealth Fund Investments in overseas energy: The energy security perspective

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  • Sun, Xiaolei
  • Li, Jianping
  • Wang, Yongfeng
  • Clark, Woodrow W.

Abstract

Sovereign Wealth Funds (SWFs) are state-owned investment funds that invest in real and financial assets. Since the global financial crisis in 2008, SWFs' investments have resulted in national security concerns of host countries because SWFs continue to expand rapidly and have become increasingly active in real-time strategic transactions. Given this background, China, which has the biggest SWF in the world, is facing severe challenges of energy resources shortages while its plan is to accomplish social and economic development goals. Energy security is a key driving force of the energy investment policy of China's SWFs. This makes the SWF investments more complicated and more politically sensitive. The combination of sovereign rights and the strategic importance of energy also makes geopolitics more complicated and brings more uncertainty to SWF investments. This article explores the relationship between energy security and energy investments of China's SWFs. It is recognised that the energy investment of SWFs must follow a sustainable path to coordinate energy security, economic growth, return on investment and national security concerns. Government policymakers are urged to balance the financial and political returns on SWFs against potential negative effects. The conclusion presents insights for policymakers, energy scholars and SWF researchers.

Suggested Citation

  • Sun, Xiaolei & Li, Jianping & Wang, Yongfeng & Clark, Woodrow W., 2014. "China's Sovereign Wealth Fund Investments in overseas energy: The energy security perspective," Energy Policy, Elsevier, vol. 65(C), pages 654-661.
    • Handle: RePEc:eee:enepol:v:65:y:2014:i:c:p:654-661
    DOI: 10.1016/j.enpol.2013.09.056
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    10. Liedtke, Stephan, 2017. "Chinese energy investments in Europe: An analysis of policy drivers and approaches," Energy Policy, Elsevier, vol. 101(C), pages 659-669.
    11. K.S.Reddy, 2019. "Pot the ball? Sovereign wealth funds’ outward FDI in times of global financial market turbulence: A yield institutions-based view," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 19(4), pages 129-139.
    12. Peng, Benhong & Zhao, Yinyin & Elahi, Ehsan & Wan, Anxia, 2022. "Pathway and key factor identification of third-party market cooperation of China's overseas energy investment projects," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
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    14. LIU Kerry, 2018. "Government Ownership In Listed Firms Around The World," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(2), pages 131-146, August.
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    19. Jos? Miguel Asensio & Alessandro Fiorini & Juan Pablo Jimenez Navarro, 2018. "Chinese foreign direct investments in the EU energy sector," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(2), pages 207-229.
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