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Operating in an inharmonious world: China Investment Corporation

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  • Leong Liew
  • Liping He

Abstract

This paper investigates the establishment and subsequent investment strategy of China's official sovereign wealth fund, the China Investment Corporation (CIC). CIC, as its stands today, is derivative of the contest between the People's Bank of China and Ministry of Finance for control over the nation's financial assets. The contest takes place amidst China's desire to avoid significant appreciation of its currency to protect its export markets and yuan value of its state-owned foreign financial assets. But investments of CIC are not merely regarded by the state as an instrument to influence the value of the yuan, they also reflect the state's attempt to better utilize its foreign exchange reserves to improve the nation's energy and resource security, and promote development of domestic industry. CIC's foreign investments have attracted global attention, but its support for China's SOEs through its banks might turn out to be more significant.

Suggested Citation

  • Leong Liew & Liping He, 2012. "Operating in an inharmonious world: China Investment Corporation," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 17(2), pages 253-267.
    • Handle: RePEc:taf:rjapxx:v:17:y:2012:i:2:p:253-267
    DOI: 10.1080/13547860.2012.668027
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    References listed on IDEAS

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    1. Guonan Ma, 2007. "Who Pays China's Bank Restructuring Bill?," Asian Economic Papers, MIT Press, vol. 6(1), pages 46-71, Winter.
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    Cited by:

    1. Oliver McPherson‐Smith, 2021. "Diversification, Khashoggi, and Saudi Arabia’s Public Investment Fund," Global Policy, London School of Economics and Political Science, vol. 12(2), pages 190-203, April.
    2. Cody D. Eldredge, 2019. "Capability and need: A framework for understanding why states create sovereign wealth funds," The World Economy, Wiley Blackwell, vol. 42(5), pages 1495-1519, May.

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