China’s CIC says wants power in exchange for money
China and other developing countries should be given more influence in the global financial system if they provide money to help resolve the world’s economic crisis, a senior official of the country’s $200 billion sovereign wealth fund said on Monday.
“Developed countries should come to talk to developing countries with humility,” Jin Liqun, supervisory board chairman of China Investment Corp, told reporters on the sidelines of a financial conference in Shanghai.
“The question is whether developed countries are ready to accept China as a major player. If you want China to take out money when the crisis happens, but give China little power when voting, nobody is going to play with you.”
China last week indicated that it stood ready to help the International Monetary Fund bail out countries hit by the global credit crisis.
British Prime Minister Gordon Brown has taken the lead in urging China and other countries with big holdings of foreign exchange reserves to make sure the IMF does not run out of money.
On Saturday, the Group of 20 leaders agreed in a Washington summit to reform Bretton Woods institutions such as the IMF to give emerging nations including China more of a voice in line with their changing economic weight.
Jin applauded the decision, saying the international financial system was based on a mechanism established 60 years ago and did not fit current circumstances, and so needed to be adjusted.
OPPORTUNITIES
Jin also pledged that CIC, which manages part of China’s nearly $2 trillion of foreign exchange reserves, would continue to expand its investment overseas and would not be intimidated by the current global market turmoil.
“The financial crisis is still going on. While there are apparently huge risks lurking in the way ahead, this provides at the same time huge investment opportunities,” Jin said.
“The investment arm of CIC will look at each and every investment opportunity that comes our way, and transact in a very prudent manner.”
CIC, which was set up a year ago, has faced criticism in China over its overseas investments. It suffered steep unrealised losses on its $3 billion stake in U.S. private equity firm Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz) and its $5 billion investment in Wall Street bank Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz).
Chairman Lou Jiwei has defended CIC’s operations.
The official Shanghai Securities News last month quoted him as saying that the investment in Blackstone would pay off in the long run and that the fund held more than 90 percent of its assets in cash just as the global equity markets were plummeting.
CIC has also invested in the share listings of Visa (V.N: Quote, Profile, Research, Stock Buzz) and China Railway Group (0390.HK: Quote, Profile, Research, Stock Buzz).
“I don’t think from now on we should all close our doors because this is too risky,” Jin said on Monday. “When you’re integrated into the globalised economy, you can certainly draw enormous resources and all kinds of benefits, but we’re not immune to the risks coming with them.”
Tags: Fund, investment, Stock