China SWF Pushes Obama to Invest in Infrastructure; Lou Jiwei Warns of Slowing Economic Growth

(November 3, 2010) — China’s sovereign wealth fund, which manages an estimated $300 billion in both domestic and overseas investments, has pushed the Obama administration to spend $1 trillion on infrastructure over the next five years.

Zhou Yuan, head of asset allocation at the China Investment Corporation (CIC), told the BBC that Beijing would be willing to invest in such projects to help create jobs and boost America’s competitiveness.

At a conference of the Chinese Financial Association in New York, Yuan said that the Beijing-based CIC is urging the US government to begin a program to invest in US infrastructure in the form of a public and private equity partnership. 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, the BBC reported.

When asked by BBC News whether CIC would invest directly, Zhou said: “If the conditions are right, and if, on a risk return basis, we believe this is a good investment, then yes…But of course we want to emphasize the fact that we are going to be a passive investor,” Yuan stated. We’re not here to run anything or to own anything.”

In related news, the head of the CIC, Lou Jiwei, has cautioned about a significant dip in Chinese growth within the next four years as a result of a retiring elderly. At a forum in Beijing this week, according to prepared remarks obtained by Bloomberg News, Jiwei explained that China’s start of the one-child policy implemented 30 years ago and longer life spans are expected to put a severe damper on the number of working adults able to support each retired citizen. Consequently, China’s economic growth rates may slow at an earlier stage compared to Japan and South Korea.