Tuesday, August 23, 2011

China's Other Sovereign Wealth Funds--Complexity and Coherence in Sovereign Investing Strategies

For some time, I have been suggesting coherence and complexity in the structuring of Chinese strategies for projecting investment power abroad.  Backer, Larry Catá, Sovereign Investing in Times of Crisis: Global Regulation of Sovereign Wealth Funds, State Owned Enterprises and the Chinese Experience. Transnational Law & Contemporary Problems, Vol. 19, No. 1, 2009; Penn State Legal Studies Research Paper No. 12-2009.  That strategy has produced not merely China's leading role in the international framework for the management of soft law regulation of sovereign wealth funds (the International Forum of Sovereign Wealth Funds); it has also produced a policy of competitive fracture among its own domestic sovereign wealth funds that may, in the aggregate project power outward and act to stabilize financial markets within China.

My research assistant, Lian Ma, has prepared a short paper generally describing some of the contours of the Chinese sovereign wealth fund investment universe.  The paper is designed to provide a general overview.  Still, certain important themes emerge: (1) Chinese outbound investment is not marked by its uniformity but rather by a loose coordination; (2) Chinese ministries with access to SWFs compete for power, influence and status through these funds, the more successful the funds, the more useful not only as a source of wealth but also internal influence within the state apparatus; (3) the blended objectives of politically targeted wealth maximization tends to provide a framework, but not an inflexible formula, for SWF investment activity; (4) the proliferation of SWFs make it possible to mediate between internal Chinese interests and activities and the expectations of host (mostly developed) states--some SWFs are put out as models and projected westward, others are more internally focused and less in the Western media  (and regulatory) eye (compare CIC with SAFE);   and (5) SWFs are providing China with an important vehicle for making an international mark--the prominence of China in SWF soft regulation, the Chinese involvement in the governance architecture of the International Forum of Sovereign Wealth Funds provides an international organization through which China can sharpen its skills in playing a positive leading role in international affairs.   


China’s Sovereign Wealth Fund(s)
A Sketch of China’s Major Sovereign Wealth Funds

The following passages include three episodes with each briefly describing one of the three major Chinese state funds, namely, SAFE, CDB, and NSSF, other than the formal Chinese Sovereign Wealth Fund – the CIC.

An Introduction to SAFE

The State Administration of Foreign Exchange (SAFE) is China’s foreign exchange regulator and manager. As China’s foreign exchange reserves have amounted over 3 trillion dollars by early 2011 while the most recent global financial crisis is not showing any sign of recess, whether the huge Chinese wealth will be safe remains a question. This essay provides a brief overview of SAFE with a focus on its overseas investment activities since SAFE has been a low-key Sovereign Wealth Fund of China.

SAFE as a State Organ

SAFE was formally founded in 1979, the year that marked the beginning of China’s economic reform.[1] SAFE has been the state foreign exchange regulator under the direct supervision of the People’s Bank of China (the central bank), which is one of the ministry-level organs under the State Council.[2]

The history of SAFE has witnessed a gradual release of state control over foreign exchanges in the past three decades.[3] There are three phases in the transitioning process of SAFE. The first phase was before the economic reform, during which the Chinese economy was highly controlled by the central government; all foreign exchange had to be sold to the state, and all the uses of foreign exchange were being allocated according to State plans.[4] In the following 15 years, which is the second phase, China’s foreign exchange was transitioning toward a market-economy where central command was being lessened and the role of market adjustment was being increased. During this time, more financial institutions were allowed to have foreign exchange business (Before 1979, only Bank of China could have foreign exchange business). The third phase started from the middle of the 1990s when China gradually established floating foreign exchange rate.[5]

Currently, SAFE maintains control over the operations of the RMB capital account whereas the RMB current account has been open to the market.[6] For the future, SAFE has several goals which include having free exchange of the RMB financial account (convertibility of the RMB capital account), improving the floating currency mechanism, and making the RMB a regional currency.[7]

As SAFE serves more as the state foreign exchange regulator and policymaker rather than as manager and player, most of its functions are regulative in nature, such as “study and propose policy suggestions on the reform of the foreign exchange administration system” and “participate in the drafting of relevant laws, regulations, and departmental rules on foreign exchange administration.”[8] Among the 10 listed “major functions” only two of them are about managing state foreign exchange assets – one is “to undertake operations and management of foreign exchange reserves, gold reserves, and other foreign exchange assets of the state” and the other one is “to take part in relevant international financial activities.” [9]

SAFE is a deputy-ministerial level administration. The organizational structure of SAFE is very much like other government organs that have branches across the country. Headquartered in Beijing, SAFE has 34 branches in China’s provinces and autonomous regions, 2 administrative offices – one in Beijing and one in Chongqing, as well as 298 central sub-branches and 518 sub-branches in cities and counties across China. [10]

The management team is currently headed by Yi Gang, who was a tenured economics professor at Indiana University. [11] Mr. Yi has become the administrator of SAFE from July 2009 while also serving as one of the vice governors of the central bank. Mr. Yi is a scholar-turned currency policy regulator. Before joining China’s central bank in 1997, he was a scholar of economics. He has been tackling China’s inflation issue and pointed out that the transformation of China’s economic development pattern held the key to addressing the inflation issue.[12]

SAFE as a China SWF

Being responsible for managing China’s huge foreign exchange reserve, SAFE has always been one of the major overseas investors before and after the high-profile Chinese sovereign wealth fund – China Investment Corporation (CIC) – was created in 2007. Derek Scissors, a research fellow from The Heritage Foundation, says SAFE is China’s largest overseas investor in the U.S.[13] However, SAFE has not been well known in the world, which is probably because of its role as a government branch rather than a business investor.

SAFE’s overseas investment started from the 1990s.[14] SAFE set up four overseas offices in Hong Kong, Singapore, London, and New York to carry different investment portfolios.[15] The most important overseas office, however, is the Hong Kong based SAFE Investment Company Ltd. (Hua’an 华安, literarily means China safe),[16] through which SAFE has been investing in western financial markets such as the U.S., the UK, etc. [17]

SAFE Investment Co. Ltd. was registered in Hong Kong in June 1997, shortly before the handover of Hong Kong to China.[18] The registration capital was 100 million Hong Kong dollars, of which SAFE held 99.999999 million shares and the then SAFE boss Ms. Hu Xiaolian held one share.[19] SAFE Investment Co. Ltd has been holding stakes in 40-50 companies in the UK worth £ 5 billion since 2008. Most of the holdings remain at about 1 percent of the total shares. For example, SAFE was reportedly to have purchased 1 percent of BP’s share in 2008.[20] The small percentage of share-holding (less than 3 percent) allowed SAFE Investment Co. Ltd to keep its activities from going public, as analysts said.[21] In other European markets, SAFE is also maintaining a low-key manner. For instance, SAFE purchased 1.6 percent shares of French Total in 2008.[22]

According to a 2008 survey by the Sovereign Wealth Fund Institute, the Hong Kong based SAFE subsidiary was listed as the third largest sovereign fund while CIC was the eighth.[23] One major issue with SAFE and its subsidiaries is the lack of transparency. There does not seem to be much information on how they operate in the global financial market. One could hardly find any detailed information about SAFE Investment Co. Ltd. online. It was reported that SAFE Investment Co. Ltd had set up another company in Hong Kong in 2007 but no information was available for this new company.[24] Due to this lack of transparency, the motivation of SAFE has been questioned by western scholars. In 2008, SAFE purchased 1.5 billion US treasury bonds from Costa Rica for Costa Rica to give up its diplomatic relationship with Taiwan.[25]

SAFE was being reported to have invested in Fannie Mae and Freddie Mac bonds, along with CIC and large commercial banks from China.[26] Reports said SAFE could lose 450 billion dollars after the American housing market meltdown starting in 2007. In response, SAFE disputed the speculation and claimed that SAFE’s investment in the securities of the two American housing markets was “normal”; the annual average investment return rate was 6 percent from 2008 to 2010.[27] The strong response to media estimation of loss in American housing markets securities was deemed as a way to offset some public concerns about the safety of China’s wealth. One blogger argued that although there might not be loss in the near term, China’s holding of American housing securities has potential risks as the American housing bubble does not seem to recover fully in the long term.[28]


As SAFE and CIC both perform as China’s sovereign wealth funds, albeit CIC is more well-known than SAFE, the two seem to be competitors. From an organizational perspective, SAFE is under the People’s Bank of China while CIC is under the Finance Ministry. The Finance Ministry is the sole shareholder of CIC, as an insider familiar with both SAFE and CIC said, given that the initial capital for CIC came from the Finance Ministry rather than from SAFE.[29]

SAFE was approved by the State Council in 2008 to use 5 percent of the total foreign reserves to invest in stocks, as an alternative to its traditional investment in American bonds.[30] One of the investments SAFE made was a 250-million-dollar project through American PE investment group TPG, which was involved in the bailout of Washington Mutual.[31] Unfortunately, Washington Mutual went to bankruptcy during the American financial crisis and so SAFE was unable to get back its investment, as the insider pointed out.[32] This insider also revealed that initially TPG approached CIC for the Washington Mutual project, but was turned down by CIC for fear of losing money. TPG then found SAFE and made the deal.[33]

In terms of incentives, SAFE is not as good as CIC because SAFE does not have many experienced investment managers; “in the front line of foreign currency investment, there are only seniors and kids,” said the insider, implying that SAFE is missing a group of capable and competent investors.[34]

The current SAFE director has made efforts to recruit experienced investment managers to boost SAFE’s performance. Mr. Yi hoped that by recruiting some of the top Chinese financial managers working in Wall Street would improve China’s foreign reserve investment portfolios.[35]

One of the newly recruits is Zhu Changhong, who was named as the chief investment officer of SAFE starting in February 2010.[36] Zhu was recruited by SAFE as part of a state plan to attract back one thousand top talents; in return, Zhu got a benefit package including an award of RMB 1 million.[37] Before joining SAFE, Zhu worked for Pacific Investment Management Co. in charge of 23 billion dollars.[38] A 2010 report said Zhu has been very effective in making a few successful SAFE investments overseas.[39] SAFE increased its holdings of the Japanese bonds in the first seven consecutive months in 2010 and then sold its holdings in August and September, making a good return at 9 to 10 percent.[40]

The good performance was reportedly associated with some mechanism changes within SAFE such as good salary package. According to a source close to SAFE’s foreign reserve department, the new salary incentive has been quite effective to attract back some of the lost talented dealers to work for SAFE. Investment dealers who had left SAFE for other global investment banks for higher salaries – the phenomenon of “brain drain” – now came back to work for SAFE when there is a need from the country.[41]

“The Invisible Vessel”

Today’s SAFE really has two hats. One is the hat of foreign exchange regulator; the other is a semi sovereign wealth fund. Domestically, SAFE is being mentioned in the media mainly as a currency regulator as SAFE often issues statements or new rules about foreign currency management. Internationally, SAFE has been wearing the hat of a sovereign wealth fund, making business investments in hope of making profits, just like CIC.

The only difference, however, is that SAFE is still being regarded as a secret investor. According to a Reuters report, SAFE has been using scores of foreign investment agents to make overseas transactions. Sometimes, SAFE also uses China’s state owned commercial banks to do some preparatory work before any transactions.[42] All the transaction orders came directly from Beijing.[43] “SAFE is like an invisible huge vessel in Wall Street,” according to an overseas dealer.[44]

China Development Bank


The China Development Bank (CDB) was founded in 1994 according to the State Council Document No. 22. As a policy bank, CDB has been providing financial resources to infrastructure, basic and pillar industries in China.[45] In 2008, CDB made a step toward commercialization by reforming the policy bank into a CDB shareholding company. The Finance Ministry and Central Huijin held 51.3 percent and 48.7 percent of its shares respectively.[46]

However, the organization structure of the bank is still very much like a government institution. The bank is headquartered in Beijing, the capital of China, with 35 branches and over 7,000 staff in every provinces and major cities as well as in Hong Kong. (The CDB Hong Kong branch was opened in July 2009 as it was upgraded from an office level institution.[47]) . Additionally, it has four offices (office is a lower level compared with branch) in Tibet, Xiamen, Cairo (as of Nov. 2009), and Moscow (as of Sept. 2010) respectively.[48] CDB is the second largest bond issuer in China after the Finance Ministry.[49] CDB also has an international advisory board, which includes former Australian Prime Minister Paul Keating and former US Secretary of State Henry Kissinger,[50] to help expand CDB’s global vision.

As the mission statement says, CDB is dedicated to “strengthening China’s competitiveness and improving the living standards of its people in support of the State’s medium to long-term development strategies and policies.”[51] Under this ambitious mission, CDB really has opened two fronts: domestic and international. Domestically, CDB loans have been used to support a wide range of industries from energy, transportation, to communication and cultural industries. Internationally, the Bank has been active in supporting the global expansion of SOEs in response to the call of the State for domestic enterprises to go global.[52] Such SOEs include PetroChina, Sinopec, State Grid, CITIC Pacific, Tongling Nonferrous Metals Group, Goldwind and Xi'an Electric Engineering Co., Ltd.[53] By the end of 2010, the Bank has financed projects in 90 countries and regions, issuing a total loan of 141.3 billion US dollars.[54]

CDB’s Global Plan

According to a 2007 report, the initial idea of CDB’s going out strategy was based on the fact that many foreign banks have had branches in China while Chinese banks rarely had branches overseas.[55] To address this issue, the headquarters divided the world into a few big chunks and having each one of CDB’s domestic branches in charge of certain overseas areas respectively. For example, CDB’s Sichuan Branch is responsible for Nepal and neighboring countries while CDB’s Henan Branch is responsible for five countries in southern Africa.[56] Usually, the procedure is to form a team for international business; mainly with 3 or 4 staff, going to the target country and making an overall assessment of the country before investing in any Chinese businesses there. After establishing a team in a target country, CDB will seek opportunities to invest in local businesses and even introduce foreign businesses to invest in China.[57] The team may be later developed into an overseas branch, as needed.[58] CDB has sent out over 100 teams overseas to establish an international network for investment and business expansion, but mostly these teams are in Asia, Africa and Latin America.[59]

When commenting on the international expansion and collaboration of Chinese financial institutes, CDB’s Chairman Chen Yuan said overseas investment by Chinese banks and Chinese enterprises should not only focus on Wall Street. Instead, they should consider going to energy and resource rich places.[60] Chen also suggested an innovative way to serve both state and commercial interests by striking deals with energy rich countries by bypassing the international/western energy markets.[61] A good example is the “loans for oil” deal that CDB has been quite successfully engaged in. [62]According to media reports, CDB has inked “oil for loans” deals in the past few years with energy rich countries including Russia, Venezuela, Brazil, etc. at a total of more than 65 billion dollars; in return, China will get an annual 75 million tons of oil.[63]

CDB has also loaned to Turkmenistan to secure gas supply to China. In this “gas for loans” deal, CDB loaned $ 4.1 billion to Turkmengaz, Turkmenistan’s state gas producer, to support the development of South Iolotan, reportedly one of the world’s most remote gas fields with challenging geological conditions, after a previous $ 4 billion loan to help develop this gas field.[64]

It is important to note that CDB has been using both political and commercial resources in its international activities. As the message given by CDB President Jiang Chaoliang said, CDB signed 79 financial collaboration agreements and memoranda with 51 countries in 2010 “under the auspices of senior government officials.”[65] The statement indicates that CDB and the Chinese government are working closely to make those energy deals. In other words, the national interests and CDB’s commercial interests converge when it comes to energy related projects. CDB does not hide its commitment to facilitating China’s state strategies and diplomatic interests, as Jiang voiced support for the state strategies and goals such as to encourage more Chinese SOEs to go global in the years ahead.[66]

However, in addition to CDB’s close relationship with the government and SOEs, CDB also supports private companies to expand globally. For example, CDB signed a cooperation deal with Huawei in 2009, providing 30 billion US dollars for Huawei’s overseas expansion.[67] Huawei, established in 1988, is a Chinese ICT provider who has established presence in Africa, Asia, Europe and North America. In a previous agreement between CDB and Huawei, the former provided 10 billion US dollars to assist Huawei’s overseas expansion. Similar to the most recent “loans for oil” deals, CDB loaned money to foreign information service providers for them to buy Huawei’s products. For instance, in 2007, India’s Reliance got a CDB loan of 750 million dollars; in return, Reliance purchased Huawei’s GSM equipment.[68]

CDB’s Role: Policy Bank + SWF?

As a financial institution, CDB has been wearing at least two hats: one is the policy bank hat and the other is the sovereign wealth fund hat. When CDB invests heavily in domestic projects in China’s domestic infrastructure, basic and pillar industries, CDB is a policy bank. When CDB is investing overseas, either through buying shares of foreign financial institutes or providing financial support to China’s SOEs, CDB is functioning like a sovereign wealth fund. But the only difference from CIC (the formal Chinese sovereign wealth fund) is probably that CDB works closely with SOEs in pursuing State strategic interests.

Although CDB has embarked on a journey of commercialization since 2008,[69] there does not seem to be a timetable for that goal to be reached. Would the goal of CDB’s commercialization become more closely tied to making CDB a secondary sovereign wealth fund after CIC? One analyst argues that CDB should become another CIC to help relieve the risk of holding trillions of dollars of foreign reserves.[70] In practice, CDB seems to be in close cooperation with other state funds such as the National Social Security Fund (NSSF). In April 2011, CDB got a total of RMB 10 billion capital from NSSF, which holds about 2.19 percent of CDB’s shares.[71] The cooperation between CDB and China’s sovereign-wealth-fund like financial institutions signaled that the commercialization of CDB would not produce a purely commercial bank. As Yan Qingmin, Assistant Chairman of China’s Banking Regulatory Commission, said in May 2011, the role of CDB will be likely a combination of a commercial bank and a policy bank.[72] CDB has been entitled to zero-risk weighting for the bonds it has issued, same as the Finance Ministry. But that entitlement will come to an end by the end of 2012, after which its risk weighting will be evaluated and determined according to its commercialization and bond market situation.[73]

As a policy bank, CDB has also been financing cultural industry projects in recent years, in addition to its priorities on infrastructure, basic and pillar industries. For example, in 2010, CDB signed an agreement to finance China’s press and publishing projects, with an annual capital investment of RMB 50 billion.[74] CDB also financed the first Chinese media and culture fund – China Media Capital, which is considered to be a Personal Equity fund.[75]

As a policy bank, CDB has also tried to forge close financial relations with Taiwan, which has always been on the top political agenda of the State. CDB has provided financing to projects involving Taiwan, [76] which has been having good economic relations with mainland China especially after a newly launched free-trade like agreement between the two sides in 2010.[77] In a cultural industry seminar between the two sides of the Taiwan Strait, held in Shanghai in May 2011, CDB’s Vice President Li Jiping said CDB has financed 517 Taiwan projects with a total of RMB 46.9 billion and will continue to support the cross-strait cultural industry development.[78] Additionally, CDB is reportedly to consider setting up a joint fund with a Taiwan financial institution.[79] CDB is also thinking of opening a branch in Taiwan.[80]


CDB is probably the most influential bank in China given its close relationship with the State and its close working relationship with China’s SOEs in overseas expansion and equity acquisition. What makes CDB unique is the bank aligns its own strategic interests with the State’s political and economic interests, as seen in the high profile energy deals with energy rich countries. The power of this converged interest between CDB, which represents the Chinese financial institution, the Chinese government, and giant SOEs, has caused debate and alarm among western observers, as China has been using this unique combination of entities to pursue energy supplies from around the world.[81]

There does not seem to have a lot of speculations about CDB becoming another Chinese sovereign wealth fund. As for CDB’s relationship with the SWFs, it seems so far limited to being a channel of relieving huge foreign reserves managed by SAFE. [82]

National Social Security Fund

The National Social Security Fund (NSSF or SSF) was established in 2000 in Beijing.[83] The Fund is managed and operated by the National Council for Social Security Fund, which is currently headed by Dai Xianglong, a former central bank’s governor.[84] Directly affiliated to the State Council, the Fund is organized under a general assembly of the councilors. Among them, the general secretary, and three other deputy secretaries are appointed by the State Council while all the other councilors are hired.[85]

According to the Fund’s official mission statement, the NSSF “aims to be a solution to the problem of aging and serves as a strategic reserve fund accumulated by the central government to support future social security expenditures and other social security needs.”[86] Ever since the establishment of the NSSF, it has been investing both domestically and overseas. The investment scope of NSSF ranges from domestic treasury bonds, securities investment funds, stocks to foreign treasury bonds, stocks, funds, and even futures.[87]

The Fund had largely remained less well known until four years after its establishment. In its first press conference held in 2004, the then general secretary Xiang Huaicheng, who was a former finance minister, made a few important announcements that unveiled the Fund to the public. Xiang announced that NSSF would increase the Fund’s stocks investment from 5.1 to 15 percent of the Fund’s total.[88] The Fund would seek to invest overseas and the first overseas investment would include Hong Kong market.[89] In 2005, NSSF made its debut in Hong Kong through the IPO of Bank of Communications.[90]

NSSF’s overseas investment was formally launched in December 2006, after the Council selected 10 foreign assets management companies as the Fund’s overseas investment agents.[91] Over the past few years, the Fund has continued to hire foreign fund management companies to help manage its overseas activities. Among the foreign agents are State Street Global Advisor, Alliance Bernstein, AXA Rosenberg, T.Rowe Price, JANUSINTECH, Allianz, UBS, INVESCO, Black Rock, PIMCO, etc, according to a 2008 report of NSSF’s overseas investment.[92] The Fund’s overseas investment portfolios include global stocks, bonds and foreign currency deposits.[93] According to Xiang, NSSF’s overseas investment had plenty of room to grow as long as the overseas investment was being kept under a limit of 20 percent of the Fund’s total assets. By 2006, the overseas investment was only about 5 percent of the Fund’s total.[94]

The Fund is getting more attention now as it has been growing and expanding in the world. According to a 2010 annual report, NSSF’s total asset has reached over RMB 8 trillion by 2010, in which 58.1 percent comes from direct investment and 41.9 percent comes from commissioned investment.[95] A recent Financial Times report says NSSF has been expanding its overseas investment not only in the US and EU markets, but also in India and other emerging markets, as well as unlisted companies and global private equities.[96]

Although the Fund has adjusted its investment portfolios by increasing stocks and entities investment, Dai, the current general secretary, argued that that the Fund is facing a major institutional obstacle while making overseas investment. He believed that the Fund should be managed according to the rule of market, implying a less government role in the Fund management activities.[97] Additionally, the fact that the Fund is relying on foreign agents to manage its overseas investment says that NSSF is still a very young investment fund.

Concluding Thoughts

In the current global financial crisis where western countries are deep in debt, China’s situation seems to be far better. China is now the loaner, lending money all over the world and buying energy and stocks. The aforementioned three major Chinese state funds, how they are organized and how they are investing in the global market introduced some basics about the various types of Chinese sovereign wealth funds, which are summarized in the following points.

First, these informal Chinese sovereign wealth funds have close ties with the state. In terms of organizational structure, both SAFE and CDB have headquarters in Beijing and branches across China. CDB works close with the State in securing foreign energy resources. NSSF is governed by a group of former government officials mainly from the Finance Ministry or the Central Bank. Second, these state funds all share a lack of transparency in terms of how they invest overseas. SAFE is probably the most secret government fund as information about SAFE’s foreign investment is not immediately available to the public. Finally, as various types of Chinese sovereign funds go overseas to invest, they do not seem to have coordination; competition may be inevitable among them as shown in the case of SAFE and CIC. As a Chinese blogger commented, China’s overseas investment and acquisition becomes “a chorus without a conductor.” [98]

[1] See “The History and Function of SAFE”, available at http://news.xinhuanet.com/zhengfu/2003-03/07/content_764583.htm; also see “About SAFE” on www.safe.gov.cn

[2] See the structure of the central government at http://www.gov.cn/gjjg/2005-08/01/content_18608.htm

[3] See “About SAFE” at http://www.safe.gov.cn/model_safe/whjjs/whjjs_detail.jsp?id=1&ID=160500000000000000

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] See “About SAFE” in English at http://www.safe.gov.cn/model_safe_en/whjjs_en/whjjs_detail_en.jsp?id=1&ID=30202000000000000

[9] Ibid.

[10] See “SAFE Structure” at http://www.safe.gov.cn/model_safe/whjjs/whjjs_detail1.jsp?id=1&ID=160400000000000000

[11] See “Management Team”, “Yi Gang”, at http://www.safe.gov.cn/model_safe_en/whjjs_en/jzjs_list_en.jsp?id=1&ID=30201000000000000 , accessed July 19, 2011

[12] Shu. M. (2008). “Vice Governor Yi Gang: Looking for an answer to the question of controlling inflation”, Nanfang Weekend, available at http://www.infzm.com/content/7510, accessed on July 12, 2011

[13] Scissors, D. (2009). “An overview of China’s overseas investment”, available at http://www.21bcr.com/a/shiye/yuwai/2010/0605/253.html, accessed on July 12, 2011

[14] Qiao, et al. (2010). “The truth about the American housing bonds”, Caijing Magazine, Vol. 19. Sept. 13, 2010. Available at http://magazine.caijing.com.cn/2010-09-12/110519332_5.html, accessed July 13, 2011

[15] Ibid.

[16] Ibid.

[17] Sester. B. (2009). Blog. Available at http://blogs.cfr.org/setser/2009/03/15/safe-seems-to-have-started-buying-us-equities-in-the-spring-of-2007-and-didnt-stop-until-july-2008/, accessed on July 13, 2011

[18] Wu. G. (2009). Blog. “SAFE overseas investment suffers 80 billion dollars loss?”, available at http://blog.soufun.com/21101922/3222433/articledetail.htm, accessed June 3, 2011

[19] See “SAFE Investment Co.” available at http://www.ezcap.cn/Org/Invest/200006370.html, accessed July 13, 2011

[20] Chen. H. (2008). “Report says China’s SAFE purchases 1 percent of BP’s share with 2 billion dollars.” Available at http://finance.sina.com.cn/world/gjjj/20080416/01554753820.shtml, accessed July 18, 2011

[21] Scissors, D. (2009). “An overview of China’s overseas investment”, available at http://www.21bcr.com/a/shiye/yuwai/2010/0605/253.html, accessed on July 12, 2011

[22] 21cbh.“China’s SAFE invests 1.8 billion euros in French Total”, available at http://www.21cbh.com/HTML/2008-4-7/HTML_VRE3XL2UIDI8.html, accessed July 15, 2011

[23] Cao. Zh. (2009). “SAFE Investment Co. listed third among SWFs”. Caijing. Available at http://www.caijing.com.cn/2009-03-27/110129316.html, accessed on July 13, 2011

[24] Wang. L. (2008). “SAFE increases securities investment overseas”, available at http://forex.cnfol.com/080919/134,1501,4792209,00.shtml , accessed July 19, 2011

[25] Scissors, D. (2009). “An overview of China’s overseas investment”, available at http://www.21bcr.com/a/shiye/yuwai/2010/0605/253.html, accessed on July 12, 2011

[26] Qiao, et al. (2010). “The truth about the American housing bonds”, Caijing Magazine, Vol. 19. Sept. 13, 2010. Available at http://magazine.caijing.com.cn/2010-09-12/110519332_5.html, accessed July 19, 2011

[27] SAFE release. (2011). Available at http://www.safe.gov.cn/model_safe/news/new_detail.jsp?ID=90000000000000000,876&id=2, accessed July 13, 2011

[28] Ye. T. (2011). Blog. “Why angry at American hoursing market bonds?”Available at http://ytyetan.blog.hexun.com/61359641_d.html, accessed July 13, 2011

[29] Cnfol.com. (2011). “SAFE is considered not as good as CIC”. Available at http://news.cnfol.com/110517/101,1277,9877628,05.shtml, accessed July 15, 2011.

[30] Ibid.

[31] Ibid.

[32] Ibid.

[33] Ibid.

[34] Ibid.

[35] Wu. X. (2010). “State Chief Investment Officer”, available at http://wallstreetcn.com/node/82, accessed July 15th, 2011

[36] Ouyang. (2010). “SAFE’s impressive deals led by investment guru”, available at http://money.163.com/10/1127/00/6MF5LKT200253B0H.html, accessed July 15th, 2011.

[37] Ibid.

[38] Ibid.

[39] Ibid.

[40] Ibid.

[41] Ibid.

[42] Chen. J. (2011). Blog. “SAFE did not waste people’s money”, available at http://chenjibingblog.blog.163.com/blog/static/11196197420112703543264/, accessed July 18, 2011

[43] Ibid.

[44] Ibid.

[45] See “Brief Introduction to CDB”, available at http://job.cdb.com.cn/, accessed July 19, 2011

[46] Ibid.

[47] Jin. Y. (2009). CDB Hong Kong Branch opens. Available at http://news.sohu.com/20090729/n265582442.shtml, accessed July 29, 2011

[48] See CDB’s organization chart at http://www.cdb.com.cn/website/cdb/upfile/2011/201167141817392.gif, accessed July 29, 2011

[49] See Baidu entry “development bank” at http://baike.baidu.com/view/950434.htm, accessed Aug 1, 2011

[50] See Bloomberg News, available at http://www.bloomberg.com/news/2011-05-02/financing-china-costs-poised-to-rise-with-decision-on-cdb-debt.html, accessed Aug 2, 2011

[51] See CDB’s mission statement at http://www.cdb.com.cn/english/NewsInfo.asp?NewsId=460, accessed Aug 1, 2011

[52] See CDB’s 2010 performance highlights at http://www.cdb.com.cn/english/NewsInfo.asp?NewsId=415, accessed Aug 1, 2011

[53] Ibid.

[54] Ibid.

[55] “CDB divides the world test”, available at http://www.21cbh.com/HTML/2007-5-16/HTML_34K1Q4NIA1ST.html , accessed July 22, 2011

[56] Ibid.

[57] Ibid.

[58] Ibid.

[59] See “SAFE issues global loans through CDB”, available at http://www.1ploan.com/forum.do/listsimp/qrySeqID_10000460.html, accessed Aug 1, 2011

[60] CCTV-finance interview with Chen Yuan, available at http://www.cdb.com.cn/web/NewsInfo.asp?NewsId=3279, accessed Aug 1, 2011

[61] Ibid.

[62] See CDB’s major international energy deals at http://www.cdb.com.cn/web/NewsInfo.asp?NewsId=3676, accessed Aug 1, 2011

[63] “SAFE issues global loans through CDB”, available at http://www.1ploan.com/forum.do/listsimp/qrySeqID_10000460.html, accessed Aug 1, 2011

[64] Gorst. I. (2011). Turkmenistan gets closer to China, available at http://blogs.ft.com/beyond-brics/2011/04/28/turkmenistan-gets-closer-to-china/#axzz1Tyz1P5OM, accessed Aug. 3, 2011

[65] See President’s message at http://www.cdb.com.cn/english/Column.asp?ColumnId=93, accessed Aug 1, 2011

[66] Ibid.

[67] Jiang, J. & Yang, Zh. (2009). CDB provides 30 billion to support Huawei, available at http://www.c114.net/news/126/a445662.html, accessed Aug 2, 2011

[68] Ibid.

[69] Xinhua news, Policy bank to be commercialized, available at http://www.china.org.cn/business/2008-02/18/content_1243063.htm, accessed Aug 2, 2011

[70] See Anbang Consulting, available at http://blog.guandian.cn/user/anbang/2011052545215, accessed Aug. 2, 2011

[71] He. X. (2011). NSSF invests RMB 10 billion in CDB, available at http://finance.qq.com/a/20110427/005261.htm, accessed Aug. 2, 2011

[72] Ye. L. (2011). The identity of CDB yet to be determined, available at http://www.caijing.com.cn/2011-05-10/110714384.html, accessed Aug. 2, 2011

[73] Ibid.

[74] CDB finances press and publishing industry, available at http://www.cflac.org.cn/newscenter/2010-08/05/content_20535240.htm, accessed Aug. 2, 2011

[75] Chen. D. The first cultural PE into operation, available at http://finance.qq.com/a/20100622/000499.htm, accessed Aug. 3, 2011

[76] Xu. & Yang. (2011). CDB finances over 500 Taiwan projects. http://finance.jrj.com.cn/industry/2011/05/29161010079705.shtml, accessed Aug. 2, 2011

[77] The agreement is called The Economic Cooperation Framework Agreement (ECFA), signed in Chongqing, China in June 2010.

[78] Ibid.

[79] Dong. Y. (2011). CDB seeks to set up joint fund with Taiwan partner, available at http://finance.eastmoney.com/news/1354,20110706146617726.html, accessed Aug. 3, 2011

[80] Business China. (2010). China Development Bank plans Taiwan presence, available at http://en.21cbh.com/HTML/2010-12-8/CDB-Taiwan.html, accessed Aug. 3, 2011

[81] See Erica S. Downs (2011). Inside China, Inc: China Development Bank’s Cross-Border Energy Deals, The Brookings Institute, March 21, 2011, available at http://www.brookings.edu/papers/2011/0321_china_energy_downs.aspx, accessed Aug. 3, 2011

For CDB’s international operations, also see Eiichi Sekine’s article available at http://www.nicmr.com/nicmr/english/report/repo/2010/2010aut02.pdf, accessed Aug. 3, 2011

[82] Zhang. Y. (2010). “SAFE loans worldwide through CDB”, available at http://blog.jrj.com.cn/bskx,772973a.html, accessed July 22, 2011

[83] See the report at http://www.ssf.gov.cn/tzsj/201105/t20110519_3185.html, accessed Aug. 5, 2011

[84] See “about ssf” at http://www.ssf.gov.cn/Eng_Introduction/, accessed Aug. 5, 2011

[85] Ibid.

[86] See “about ssf” at http://www.ssf.gov.cn/Eng_Introduction/, accessed Aug. 5, 2011

[87] Ibid.

[88] See Caijing magazine, issue 8, April 2004, available at http://magazine.caijing.com.cn/templates/inc/chargecontent2.jsp?id=110063558&time=2004-04-20&cl=106, accessed Aug. 5, 2011

[89] Ibid.

[90] Li. Y. (2005). NSSF lands in Hong Kong through IPO of Bank of Communications. Available at http://finance.sina.com.cn/fund/sbjj/20050608/04011665972.shtml, accessed Aug. 8, 2011

[91] Xu. K. (2007). Xiang: NSSF to increase overseas investment. Caijing, available at http://www.caijing.com.cn/2007-03-28/100017379.html, accessed Aug. 5, 2011

[92] See overseas investment chart at http://www.ssf.gov.cn/tzyy/jwtzdt/200812/t20081208_1563.html, accessed Aug. 8, 2011

[93] Ibid.

[94] Ibid.

[95] See the report at http://www.ssf.gov.cn/tzsj/201105/t20110519_3185.html, accessed Aug. 5, 2011

[96] Jamil Anderlini. (2010). China Fund Looks West for Rapid Expansion. Available at http://www.ftchinese.com/story/001031970, accessed Aug. 8, 2011

[97] Liu. L. (2011). On NSSF’s Selection of Foreign Agents for its Overseas Investment. Available at http://finance.southcn.com/f/2011-06/17/content_25604172_3.htm, accessed Aug. 8, 2011

[98] Zhao. J. (2009). China’s Overseas Acquisition: A Chorus without a Conductor. Available at http://zhaojianfei.blog.caixin.cn/archives/59, accessed Aug. 8, 2011


From the SAFE website:

Yi Gang     Particular
Deputy Governor of the People’s Bank of China (PBC) & Administrator of the State Administration of Foreign Exchange (SAFE)
Dr. Yi Gang, Ph.D in Economics, Professor. Dr Yi Gang was an Associate Professor with tenure at Indiana University and then joined the faculty of Peking University as professor, vice head of the Center for Economics Research, and Ph.D advisor in Economics. He went to the PBC in1997 and then successively served as Deputy Secretary-General and Secretary-General of the Monetary Policy Committee, Deputy Director-General and Director-General of the Monetary Policy Department, and Assistant Governor, as well as President of the Operations Office from September 2006 to October 2007. In December 2007, he was appointed Deputy Governor of the People's Bank of China.  He now serves as Deputy Governor of the People’s Bank of China and Administrator of the State Administration of Foreign Exchange (SAFE).

DENG Xianhong     Particular
Deputy Administrator of the State Administration of Foreign Exchange (SAFE)
Mr. DENG Xianhong, Master degree. Prior to joining the SAFE, he successively served as Deputy Director of Annual Project Division of Comprehensive Programming Department, Director and Deputy Director-General and Director-General of Department of Comprehensive Programming and Experimentation in the State Commission for Restructuring Economic Systems. Then he worked as Director-General of General Affairs Department of the SAFE. In October 2004, he was appointed as Deputy Administrator of the State Administration of Foreign Exchange.

FANG Shangpu     Particular
Deputy Administrator of the State Administration of Foreign Exchange(SAFE)
Mr. FANG Shangpu, Master degree, associate research fellow. In the People’s Bank of China (PBOC) Fujian Branch, he successively served as Deputy Director and Director of Finance Research Institute, Director of General Administration Division, Director of Comprehensive Programming Division, Director of Finance Center. Then he joined Fujian Industrial Bank as Deputy Governor. After that, he worked as Vice President of PBOC Shanghai Branch and Deputy Administrator of SAFE Shanghai Branch,Chief Accountant of State Administration of Foreign Exchange.In June 2006, he was appointed as Deputy Administrator of the State Administration of Foreign Exchange.

WANG Xiaoyi     Particular
Deputy Administrator of the State Administration of Foreign Exchange (SAFE)
Mr. WANG Xiaoyi, Bachelor's Degree, Senior Economist. Prior to joining the SAFE, he served in the Office of Economic Policy Reform and in the Planning Department of the People's Bank of China.  At the People's Bank of China, he successively served as Deputy Director of the Forecasting Division of the Research and Statistics Department and Director of the Economic Survey Division; Deputy Director-General and Director-General of the Research and Statistics Department and Director-General of the Statistics Department.  He has also served as Alternate Executive Director and Executive Director of China's Executive Director Office of the IMF and as Chief Economist of the SAFE. In December 2007, he was appointed Deputy Administrator of the SAFE and a member of its Leading Party Members' Group.

LI Chao     Particular
Deputy Administrator of the State Administration of Foreign Exchange (SAFE)
Mr. LI Chao, Master's Degree, Senior Economist. Prior to joining the SAFE, he served successively at the China Construction Bank, the China Securities Regulatory Commission, and the People's Bank of China. At the China Construction Bank, he served successively as Deputy Office Secretary for the Deputy Director of the Personnel Division of the Human Resources Department, Director of the Cadre Administration Division of the Personnel and Education Department, Director of the First Division of the General Office, and Deputy Director of the General Administration Division. He then joined the China Securities Regulatory Commission as Deputy Director of the General Administration Department and Deputy Director of the Party Committee Office.  At the People's Bank of China, he was appointed successively as Deputy Director and Director of the General Administration Department and Deputy Director and Director of the Party Committee Office. In December 2008, he was appointed Deputy Administrator of the SAFE and a member of its Leading Party Members' Group.
An additional source for the National Social Security Fund is Stuart Leckie, A Review of the National Social Security Fund, The Japanese Society of Certified Pension Actuaries (2008).


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