Aug 31

Awards: In 2008, Time magazine considered Lou one of the 100 most influential people in the world. (Time magazine)

Lou Jiwei is Chairman and CEO of China Investment Corporation and formerly served as China’s Vice Minister of Finance and as Vice-Governor of Guizhou.

The People’s Republic of China has more than US $2 trillion in currency reserves. The China Investment Corporation was established with the intent of utilizing these reserves for the benefit of the state.

Now Lou Jiwei admits:
“It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose.”

All of this mess is created by design and they can’t lose, but the taxpayer is losing all of the time.


lou-jiwei
Lou Jiwei
(Bloomberg)

BEIJING (Reuters) – China Investment Corp is investing as much overseas each month this year as it did in all of 2008, Lou Jiwei, the chairman of the $298 billion sovereign wealth fund, said on Saturday.

CIC is counting on handsome returns this year and might one day ask the government to hand it more of the country’s record hoard of foreign reserves to manage, Lou, a former vice finance minister, said.

The fund invested just $4.8 billion outside China last year as it kept its powder dry during the global financial crisis, when asset prices tumbled. It held fully 87.4 percent of its overseas investments in cash or cash equivalents.

Now that markets are recovering, CIC is constructing a broad-based portfolio, Lou told reporters on the sidelines of a forum organized by the Washington-based Brookings Institution and the Chinese Economists 50 Forum, a Beijing think-tank.

CIC posted a negative 2.1 percent return on its global investment portfolio last year as the value of stakes such as those in Wall Street bank Morgan Stanley (MS.N) and private equity giant Blackstone Group (BX.N) slumped.

But Lou said 2009 was shaping up better.

“It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose,” he said.

CIC was set up in September 2007 with $200 billion of foreign currency reserves transferred from the central bank, which manages its own stockpile of $2.13 trillion.

“If our returns are not bad and the state’s FX reserves are still rising, we may go and ask for more,” Lou said.

He said the risk of a decline in the dollar risks was more of a national issue for China than for CIC because its capital is in dollars.

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