{ "id": "RL34337", "type": "CRS Report", "typeId": "REPORTS", "number": "RL34337", "active": false, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 344915, "date": "2009-02-24", "retrieved": "2016-04-07T02:43:26.299343", "title": "China\u2019s Sovereign Wealth Fund", "summary": "China established its major sovereign wealth fund, the China Investment Corporation (CIC) on September 29, 2007\u2014six months after it first announced its intention to create such a fund. Financed with $200 billion in initial capital, the CIC is one of the largest sovereign wealth funds (SWFs) in the world.\nThe creation of CIC was somewhat controversial in China. Both the People\u2019s Bank of China (PBOC) and the Ministry of Finance (MOF) reportedly wanted the CIC under their authority. In the end, the CIC reports directly to China\u2019s ruling State Council. However, as part of the interagency struggle, it was decided that the CIC would have to make significant purchases in several state-owned banks, as well as purchase the Central Huijin Investment Corporation (CHIC) from the PBOC.\nAlthough some of the CIC\u2019s initial investments were apparently political in nature, the CIC\u2019s top management have repeatedly asserted that future investments will be commercially based. The CIC and its subsidiaries have made several investments, including the purchase of 9.9% of the U.S. financial firm, Morgan Stanley, on December 19, 2007. Meanwhile other government-owned entities in China\u2014including the State Administration of Foreign Exchange (SAFE)\u2014have started to act like sovereign wealth funds and have been making sizable overseas investments.\nAccording to top Chinese officials, the CIC was created to improve the rate of return on China\u2019s foreign exchange reserves and to prevent the nation\u2019s excess financial liquidity from contributing to domestic inflation. Depending on its performance, the CIC may be allocated more of China\u2019s growing stock of foreign exchange reserves in the future. However, its first-year results have raised questions about its investment strategy and calls for administrative reforms for CIC.\nA number of experts in international finance have expressed some concern about the recent growth in SWFs and China\u2019s creation of the CIC. Analysts have cautioned that major shifts in SWF investments could potentially disrupt global financial markets and harm the U.S. economy. Other experts are less concerned about SWFs and the CIC, and welcome their participation in international investment markets. China has responded by maintaining that the CIC will prove to be a source of market stability. China has also stated that it has no intention of using its SWF to disrupt the U.S. economy or global financial markets.\nThere have been calls for greater oversight and regulation of the activities of SWFs. The International Monetary Fund (IMF), in consultation with many of the leading SWFs, has developed a set of voluntary \u201cGenerally Accepted Principles and Practices\u201d (GAPP) for the operation of SWFs. The Organization of Economic Cooperation and Development (OECD) has drafted policy guidelines for countries that are recipients of SWF investments. Some international financial experts have suggested elements to be included in such guidelines, including standards for transparency, governance, and reciprocity. Other experts have suggested that the United States should review its current laws and regulations governing foreign investments in the United States, and possibly implement special procedures or restrictions on proposed investments by SWFs. These include financial reporting requirements, limits on SWF ownership of U.S. companies, restrictions on the types of equity investments SWFs can make in U.S. companies, and special tax provisions for SWFs. This report will be updated as circumstances warrant.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RL34337", "sha1": "b6e2f32e77c753680a2792a67530665d1148cc34", "filename": "files/20090224_RL34337_b6e2f32e77c753680a2792a67530665d1148cc34.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RL34337", "sha1": "95a4e6501ed943f83423e02d54367be5c683ae36", "filename": "files/20090224_RL34337_95a4e6501ed943f83423e02d54367be5c683ae36.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc818551/", "id": "RL34337_2008Sep26", "date": "2008-09-26", "retrieved": "2016-03-19T13:57:26", "title": "China\u2019s Sovereign Wealth Fund", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20080926_RL34337_caf3ccb789d1721e454bcbec2255222dda5f0378.pdf" }, { "format": "HTML", "filename": "files/20080926_RL34337_caf3ccb789d1721e454bcbec2255222dda5f0378.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc700637/", "id": "RL34337_2008May05", "date": "2008-05-05", "retrieved": "2015-08-27T16:20:31", "title": "China's Sovereign Wealth Fund", "summary": "This report discusses China's ruling executive body, the State Council, which establishes the China Investment Corporation (CIC), a sovereign wealth fund, in September 2007 to invest $200 billion of China's then $1.4 trillion in foreign exchange reserves. Congress and financial analysts raised concerns about the CIC after its creation, partly because it was a comparatively large sovereign wealth fund, partly because it was government-owned, and partly because it reported directly to the State Council.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20080505_RL34337_2264fa8a1b403db8967209ca27c166ae1052a77b.pdf" }, { "format": "HTML", "filename": "files/20080505_RL34337_2264fa8a1b403db8967209ca27c166ae1052a77b.html" } ], "topics": [ { "source": "LIV", "id": "Foreign policy", "name": "Foreign policy" }, { "source": "LIV", "id": "Foreign economic relations -- China -- U.S.", "name": "Foreign economic relations -- China -- U.S." }, { "source": "LIV", "id": "Foreign economic relations -- U.S. -- China", "name": "Foreign economic relations -- U.S. -- China" }, { "source": "LIV", "id": "Foreign investments -- China", "name": "Foreign investments -- China" }, { "source": "LIV", "id": "International finance", "name": "International finance" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc810092/", "id": "RL34337_2008Jan22", "date": "2008-01-22", "retrieved": "2016-03-19T13:57:26", "title": "China\u2019s Sovereign Wealth Fund", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20080122_RL34337_cc046df18fb655e0b434266b979de45b26a7b504.pdf" }, { "format": "HTML", "filename": "files/20080122_RL34337_cc046df18fb655e0b434266b979de45b26a7b504.html" } ], "topics": [] } ], "topics": [ "Economic Policy", "Foreign Affairs", "National Defense" ] }