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China's sovereign wealth fund to increase direct investments in US

Xinhua | Updated: 2017-05-20 10:27

NEW YORK - China Investment Corporation (CIC), the sovereign wealth fund, plans to make more direct investments in the United States, as it sees greater trade and investment potential in the world's largest economy, CIC said on Friday

Tu Guangshao, vice chairman and president of CIC, said setting up overseas branches is a strategic move for the fund to expand global outreach, deepen partnership, and improve investment capabilities.

China's sovereign wealth fund held an opening ceremony of its New York representative office and an investment seminar on Friday.

The New York representative office's main function, Tu explained, includes conducting research on North American economy, financial market and regulation policies, strengthening cooperation with business partners, collecting project information and providing support for the headquarters.

"It will also stay well-connected with local government agencies and regulatory bodies to enhance CIC's reputation and image as a responsible institutional investor," he said.

Tu is optimistic that China and the United States will expand cooperation on investment as the two countries are in mutual need of closer bilateral ties.

For China, outbound investment has become a key component in the sustainable development of its economy, as Tu observed.

He said that for the United States, President Donald Trump's pro-business policies including tax reform, deregulation and infrastructure plan, if effectively implemented, will further boost corporate spending, capacity utilization, and labor productivity.

"As an effective source of funding for these policies, foreign investment will serve as an important driver for the US economy," Tu said in a keynote speech.

According to Tu, US holdings currently accounts for approximately 40 percent of the fund's overseas portfolio, but mostly in open market.

He added that the fund is looking to change its investment strategy but the process will be a gradual one.

Headquartered in Beijing, CIC started with an initial funding of $200 billion. By the end of 2015, its total assets had surpassed $810 billion.

As China's sovereign wealth fund, CIC serves as a vehicle to diversify China's foreign exchange holdings and seek maximum returns for its shareholder within acceptable risk tolerance.

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