Bonds to raise 200b yuan for CIC

PUBLISHED : Tuesday, 11 September, 2007, 12:00am
UPDATED : Tuesday, 11 September, 2007, 12:00am

The Ministry of Finance announced yesterday the sale of 200 billion yuan of special bonds to fund China Investment Corp (CIC), a state-owned overseas investment unit expected to be launched this week.

The ministry said on its website that the special bonds would help curb excess liquidity in the economy and cool lending growth.

The bonds, which can be sold directly to individuals, will be distributed in two stages - the first half this month and the rest by the end of the year.

To capitalise CIC, the finance ministry transferred 600 billion yuan to the central bank through the Agricultural Bank of China last month. The central bank then injected the same amount in foreign exchange reserves into CIC.

The rest of the start-up capital of 1.55 trillion yuan, including the 200 billion yuan of bonds, would be handed to the investment company by the end of the year.

Beijing hopes the CIC can invest a share of the country's US$1.4 trillion in foreign exchange reserves overseas for better returns, while helping to ease the mounting appreciation pressure on the yuan.

The CIC's senior management team, including policymakers and investment bankers, had been selected and the company was expected to start business this week, China Securities Journal reported yesterday.

Lou Jiwei, a deputy secretary-general of the State Council, will be CIC chairman, while Gao Xiqing, a deputy director of the National Committee of Social Security Funds, will oversee the company's daily operations as general manager, according to the newspaper.

Vice-Finance Minister Zhang Hongli and Central Huijin Investment Corp general manager Xie Ping will be deputy general managers and will assist Mr Gao.

Goldman Sachs Group (Asia) general manager Hu Zuliu is expected to join the team to head the research division.

On the sidelines of the World Economic Forum in Dalian on Friday, Mr Hu said CIC needed to hire 100 to 200 investment specialists to oversee investment projects.

He said CIC also needed 1,000 employees in other fields, such as information technology, risk management and legal affairs, to guarantee the investment arm's daily operation.

An investment banker, who has known Mr Gao for years, said he was the right person for the role of general manager because of his fund management background and easy-going personality.