The Chinese way with sovereign wealth
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The Chinese way with sovereign wealth

Dai Xianglong, NSSF: big boosts for AUM

While China’s leading state banks take a trip down memory lane, loading up on bad debt like it’s 1999 (or 1989, or 1979), one slice of the country’s economy is literally rolling in cash. The country’s three vast sovereign wealth funds are awash with money and getting bigger all the time, swelling as they siphon state cash into everything from US treasuries to stakes in global buyout firms.

Unlike so much in this often excessively homogenous nation, China’s three big sovereign funds are a diverse bunch, each with its own set of tics and quirks.

Safe Investment Company is strange in that it is not based in Beijing at all but Hong Kong, using its asset base ($347 billion at end-2010) to buy smallish chunks of global blue chips including French oil company Total, Australian lender ANZ and resources giant BHP Billiton.

Annual rate of return at two leading
Chinese Sovereign wealth funds
NSSF and CIC, 2001 to 2010

 Sources: SWF Institute, Fund data

Safe Investment’s heft and its roots (it is controlled by the State Administration of Foreign Exchange, the nation’s piggy-bank and gatekeeper to around $3 trillion in foreign reserves) give it credibility but not swagger.

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