China Investment Corp. Again Looks to U.S. Infrastructure

July 18, 2017

Economic growth figures for China's economy were reported today by its Commerce Department, with second- quarter GDP reported 6.9% above the second quarter of 2016. Industrial production grew by 7.6%, fixed-asset capital investment by 8.5%, and consumer spending by 11%. China's growth in 2017 will be faster than in the previous year, for the first time since 2010; and that, with the government clamping down on real estate bubbles and shadow banks.

China Investment Fund (CIC) is a sovereign wealth fund investing about $800 billion, based on China's foreign exchange reserves, which currently total about $3.1 trillion. CIC recently moved its North American offices to New York. The New York Times quoted CIC Managing Director Liu Fangyu's statement on July 11, requesting more openness to its investments in the United States.

"We hope that the U.S. government will provide us with a more liberal, equal and non-discriminatory investment environment," Liu said. "The fund is particularly focused on infrastructure."

The CIC's previous managing director, Deng Xuedong, had said in a January speech in Hong Kong that CIC wanted to reinvest some or all of its assets currently in U.S. Treasury securities, into an "infrastructure build" in the United States. Deng had estimated that a real renewal of the United States' economy's decrepit infrastructure would require a whopping investment of $8 trillion. Deng's remarks were carried at the time in the South China Morning Post of Hong Kong; and, according to Monday's New York Times, in a China government publication simply called The Paper.

The Times reported that CIC currently has $90 billion invested in United States, "mostly in the financial markets." This refers primarily to $60 billion in U.S. Treasuries.

Most of the Times article, unfortunately, concerns attempts or intents to block such investment by China, in Congress and by some in the Trump Administration.