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CIC fills chairman position

By Yu Xi in Shanghai Source:Global Times Published: 2013-7-7 21:18:01

China Investment Corporation (CIC), a sovereign wealth fund charged with managing a portion of the country's foreign exchange reserves, named Ding Xuedong as its new chairman in an announcement posted Friday, an appointment which ends the position's four-month vacancy.

Ding, 53, has served in the past as China's vice finance minister as well as vice secretary general of the State Council.

Yet, despite his experience with these central bodies, some observers have highlighted his lack of professional exposure to the overseas financial market as a potential liability.

"The head of the CIC should have a strong political background in addition to expertise and experience when it comes to investing in the global market," Ye Tan, a prominent financial commentator, told the Global Times Sunday. "It's still too early to judge whether Ding can effectively lead CIC given his seeming lack of familiarity with international investment," Ye added.

Speculations regarding who would step up to helm CIC have been on the rise since March, when the corporation's former head, Lou Jiwei, was named finance minister.

According to Zhou Yu, the director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, this position has probably remained vacant for so long because no one has wanted to accept the responsibility and the pressure of running this fund.

"The global economic downturn, the appreciating yuan, and restrictions in some developed countries which block Chinese investment into the real economy have already damaged the fund's portfolio," explained Zhou.

"Of course, we can't expect one person to improve this situation overnight. The former CIC chairman was an excellent investor, but obviously this didn't change anything about the strength or weakness of the global investment environment," Zhou went on to say.

CIC was established in 2007 to invest part of China's foreign currency holdings into overseas commodities and private equity groups.

In 2011, CIC posted a loss of 4.3 percent on its offshore positions, marking the corporation's worst annual performance to date. Over the years, the fund's losses from investments in US private equity firm Blackstone Group LP and investment bank Morgan Stanley have repeatedly sparked questions about the institution's ability to generate a profit.

According to its 2011 earnings report, CIC held a total of $482 billion in assets at the end of that year. The corporation's financial results for 2012 have not yet been released.

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