The Wall Street Journal-20080201-China Investment-Fund Head Says Focus Is on -Portfolios-
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China Investment-Fund Head Says Focus Is on 'Portfolios'
Full Text (475 words)WASHINGTON -- The head of China's big state-owned investment fund said he was looking to invest in "portfolios" of companies, rather than individual firms, and wouldn't invest yet in some European countries because he felt "extremely unwelcome" there.
Lou Jiwei, chairman of China Investment Corp., which has $200 billion in assets, is in the U.S. for a series of meetings that have so far included the California Public Employees' Retirement System, the state's big pension fund, and scheduled sessions here yesterday with the Treasury secretary, the head of the International Monetary Fund, congressional heavyweights and World Bank senior management. Today, he heads to Wall Street.
Although CIC's recent investments in Morgan Stanley and private- equity firm Blackstone Group LP have been generally welcome in Washington, there has been widespread concern that they were meant to increase Beijing's political influence. Mr. Lou took pains to present his fund as acting solely on a commercial basis. Indeed, he said, it was advertising for outside managers to handle much of its investment decisions because it lacked the knowledge internally.
"We're focusing on financial portfolios," he said in a session at the World Bank, but he didn't fully explain his meaning. At one point, he appeared to be saying he would be looking for vehicles like mutual funds. At another, he said that he was looking to balance investments in different sectors and different parts of the world.
Mr. Lou said China sought investments in natural-resource conservation and clean energy. "Although I smoke myself, we won't invest in the tobacco industry," he said, to laughter.
To allay concerns in the U.S. and Europe about the possible political motives of CIC and other so-called sovereign investment funds, the IMF is working with dozens of such funds to put together voluntary codes of "best practices." It hopes to have a final version by the fall, but Mr. Lou said the effort is going badly.
At an IMF session in the fall, "there wasn't any agreement," he said. "Nobody wants to agree that anyone is better than themselves" when it comes to issues of transparency and disclosure. But he said the talks would continue.
Mr. Lou said CIC's $5 billion investment in Morgan Stanley wasn't typical of what he is seeking. He said Morgan Stanley had approached CIC, comparing the opportunity to a rabbit appearing in front of a simple farmer. "If we see a big fat rabbit, we will shoot at it," he said. But commenting on the plunge in the stock market since the December investment, he said, "Some people may say we were shot by Morgan Stanley."
The Chinese investment chief said his company wouldn't invest where it wasn't "welcome." He didn't refer to any specific country or comment, but French President Nicholas Sarkozy and German Chancellor Angela Merkel are among those who have expressed qualms about sovereign-wealth-fund investments.
