CIC may receive another US $ 200 billion government injection to focus on overseas investment (VC303)

On April 26th, three people familiar with the matter said that CIC will soon receive US $ 100-200 billion in new funds from the government.

The British "Financial Times" said that CIC has allocated all its 110 billion US dollars for overseas investment in place. As it obtains new funding, Beijing is trying to reduce its exposure to US Treasury bonds. Several senior officials, including the governor of the central bank, have stated that China's foreign exchange reserves have exceeded reasonable demand.

China's foreign exchange reserves increased by nearly US $ 200 billion in the first quarter of 2011, and the total amount exceeded US $ 3 trillion for the first time. In the past week, two official senior economists have said that China only needs about one trillion US dollars in foreign exchange reserves.

It is reported that in addition to giving out more funds to CIC, Beijing is also considering the establishment of new special-purpose investment funds with foreign exchange reserves, investing in industries such as energy and precious metals, and possibly establishing a foreign exchange leveling fund.

Policymakers are engaged in a heated debate on the theme of how much new capital CIC should receive. At the same time, there was a bureaucratic battle between the central bank and the Ministry of Finance regarding whether the central bank should have greater control over CIC. "The bureaucratic warfare has been going on for a year," a person familiar with the matter said. "It's difficult to solve."

The central bank has proposed that the foreign exchange reserve management agency of the central bank, the State Administration of Foreign Exchange, either directly invest as a shareholder of CIC, or entrust CIC to manage part of its foreign exchange reserves on its behalf.

People familiar with the matter said that these proposals have been rejected, and CIC is now likely to receive new funds from the Ministry of Finance, just as the agency initially received capital injections in 2007. The Ministry of Finance is a shareholder of CIC.

After initially investing in Western financial institutions, CIC turned to overseas investments that benefited from China's economic prosperity.

The above information source "Venture Investment" is authorized by the China Venture Capital Research Institute (CVCRI) to publish it. All rights reserved. Please indicate the source when reprinting. For more information, please click download to view all articles.
Contact number 400-609-6665 800-999-3099
E-mail: