China's sovereign wealth fund to increase direct investments in US

China's sovereign wealth fund, China Investment Corporation (CIC), announces plans to make more direct investments in the United States. [Photo: VCG]

China Investment Corporation (CIC) plans to make more direct investments in the United States, as the sovereign wealth fund sees greater trade and investment potential in the world's largest economy.

Tu Guangshao, President and Vice Chairman of the CIC, said on Friday that setting up overseas branches is a strategic move for the fund to expand global outreach, deepen partnership and improve investment capabilities.

The Chinese sovereign wealth fund held an opening ceremony of its New York representative office and an investment seminar on Friday.

The New York representative office's main function, Tu explained, includes conducting research on the North American economy, financial markets and regulation policies, as well as strengthening cooperation with business partners, collecting project information and providing support for the headquarters.

"It will also stay well-connected with local government agencies and regulatory bodies to enhance CIC's reputation and image as a responsible institutional investor," he said.

Tu is optimistic that China and the US will expand cooperation on investment as the two countries are in mutual need of closer bilateral ties.

Tu observes that, for China, outbound investment has become a key component in the sustainable development of its economy.

He said that for the US, President Donald Trump's pro-business policies including tax reform, deregulation and infrastructure plan, if effectively implemented, will further boost corporate spending, capacity utilization, and labor productivity.

"As an effective source of funding for these policies, foreign investment will serve as an important driver for the US economy," Tu said in a keynote speech.

According to Tu, US holdings currently account for approximately 40 percent of the fund's overseas portfolio, but mostly in the open market.

He added that the fund is looking to change its investment strategy but the process will be a gradual one.

Headquartered in Beijing, the CIC began with an initial funding of 200 billion US dollars in 2007. By the end of 2015, its total assets surpassed 810 billion dollars.

As China's sovereign wealth fund, the CIC serves as a vehicle to diversify China's foreign exchange holdings and seek maximum returns for its shareholders within acceptable risk tolerance.