Despite Pessimistic Outlook, CIC Seeks European Investment

(April 17, 2011) — The China Investment Corporation (CIC), the country’s $300 billion sovereign wealth fund, is warily targeting opportunities in Europe.

While default in the Eurozone is threatening institutional investors and asset managers, CIC Chairman Lou Jiwei has expressed his cautious position on continued investment in the European region, which accounted for 20.5% of the fund’s diversified equity investments at the end of 2009, according to its latest financial reports.

“From the investment perspective, (we’re) not very optimistic about Europe,” Lou said at the Boao Forum for Asia, the Wall Street Journal reported. “But it doesn’t mean we wouldn’t like to invest (in Europe),” he said. Lou acknowledged the stalled economic growth of European countries as a result of the eurozone sovereign debt crisis, yet he indicated that there are still opportunities in Europe with regards to investing in infrastructure. 

The chairman — who predicted that economic growth is likely to slow next year — also emphasized the key role that emerging markets have in impacting Europe’s economy and more broadly the globe’s financial landscape. According to Lou, strong recovery in emerging markets will repair the global economy, the WSJ reported.

Lou has been aggressive in expressing his belief over continued investment in infrastructure not only in Europe, but in the United States as well. In November, the CIC pushed the Obama administration to spend $1 trillion on infrastructure over the next five years in the form of a public and private equity partnership. Zhou Yuan, head of asset allocation at the CIC, told the BBC that Beijing would be willing to invest in such projects to help create jobs and boost America’s competitiveness.

Under the CIC’s recommendations, the US should refocus its attention on creating super high-voltage transmission lines and improving high-speed links to better connect US cities, which would lead to 500,000 high-paying manufacturing jobs.