What is the China Investment Corporation?
China Investment Corporation (CIC) is the sovereign wealth fund of the People's Republic of China that invests on a long-term basis in public and private assets to diversify the country's foreign exchange holdings. The CIC was initially funded in 2007 with $200 billion of registered capital. Professional investment personnel, corporate governance, and risk management practices have been installed at CIC. The investment organization currently operates three subsidiaries: CIC International Limited, CIC Capital Corporation, and Central Huijin Investment Limited.
Understanding the China Investment Corporation (CIC)
According to its website, CIC operates on the following four main principles: 1) seeking maximum returns within "acceptable" risk parameters; 2) investing for returns instead of corporate control; 3) acting as a "responsible investor, abiding by the laws and regulations of China and recipient countries and conscientiously fulfilling [its] corporate social responsibilities"; and 4) conducting deep research for a prudent and disciplined decision-making process. Investment decisions are run by committees. In October 2017, CIC reported that it held over US$900 billion in assets under management (AUM).
CIC has since evolved as a single entity founded in 2007. CIC International, a subsidiary established in 2011, invests abroad in public market equity and fixed income securities, and alternative asset funds including hedge funds, private equity, real estate, and venture capital. CIC Capital, set up in 2015, makes direct investments (alternative assets not in pooled vehicles), and Central Huijin, an entity originally part of CIC but then made separate, takes equity stakes in state-owned financial institutions in the country and exercises its rights as a shareholder, when necessary, to promote changes to strengthen their stability and performance.
Portfolio Disclosure as Year-End 2016
CIC disclosed an approximate portfolio allocation of 46% public equities, 37% alternative assets, 15% fixed income securities and 2% cash. Two-thirds of the aggregate portfolio was externally managed as of year-end 2016 and the balance managed internally by CIC staff.