Who's afraid of sovereign wealth funds?

Abstract

A spectre is stalking the world: the spectre of a rich Chinese state buying strategic resources, hollowing out companies, gobbling up financial institutions and threatening the sovereignty of the countries in whose resources and companies it invests. The China Investment Corporation (CIC) – a sovereign wealth fund company (SWF) – is the stalking horse of the Chinese state. Using the CIC as an example, this article argues that the warning about SWFs has little to do with their size, the speed of their growth or what SWFs have or have not done. It is about a shifting power relationship in the global economy. This broader realignment may have been occurring slowly, but it is happening. Neither side – those who have been writing the rules of the game for international political economy and those who are historically rule-takers – is fully willing to acknowledge the shift and take responsibility to build a new architecture of an international financial system that can accommodate interests of old and new players.

Abstract

Notes

1. CIC is managed by a seven-member board: Lou Jiwei, Chairman of CIC, former deputy secretary-general of the State Council, deputy governor of Guizhou and deputy minister of Finance; Gao Xiqing: President of CIC, law degree from Duke University in 1986, worked at a law firm on Wall Street, taught at universities in China; Zhang Hongli, current deputy minister of Finance; Xie Ping, general manager of Huijin Investment Corp., which was absorbed by CIC; Wang Jiansi, Bank of China; and Yang Qingwei, director of investment at NDRC (National Development and Reform Commission).

Additional information

Notes on contributors

Xu Yi-chong

XU Yi-chong is at the Centre for Governance and Public Policy, Griffith University.