The Rise of China Investment Corporation: A new member of the sovereign wealth club

Friedrich Wu & Arifin Seah

Published: June 2008

The sovereign wealth club acquired a new member with the official launch of the China Investment Corporation (CIC) on 29 September 2007. The arrival of CIC has further heated up the debate on sovereign wealth funds (SWFs) and their potential implications for global financial markets. This is because, in carrying out its investments, CIC can tap into China’s huge official foreign exchange reserves, which by April 2008 had surged to US$1.76 trillion. CIC’s initial working capital of US$200 billion makes it the fifth largest SWF in the world today. This article seeks to analyze the background of the emergence of CIC, its hitherto investment strategy as well as the potential economic and political implications of its offshore investments, and finally the challenges it is likely to face in the near term.

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