Research On International Development Of The Sovereign Wealth Funds And The Enlightenment To China

Sovereign Wealth Funds (SWFs) originated in 1953 when the Kuwait Government set up the Kuwait Investment Authority. Afterwards, it was followed by many other Middle East oil-exporting countries that they set up their own SWFs in order to cope with the depletion of future resources and subsidize the financial expenditure when the oil price is at low level. The SWFs are run in the globe financial markets and have made huge profits. However, the sovereign funds become an international sensitive topic from political and economic sense only when China and Russia have established their own funds respectively in new century. Subsequently, the relevant international discussions have started around SWFs' potential political risks and also the accountability and transparency.Chinese Investment Co., Ltd. (CIC) set up in 2007. Unfortunately, it has met huge challenges since the day it was founded. However, the international financial turmoil has made the situation be more complex. It is also recognized that the SWFs can also be a positive contributor in saving the sinking financial markets. The SWFs have injected tens of billions of dollars into the Global main banking institutions. However, SWFs have also suffered a huge loss in the crisis and most of the funds began to adopt a more conservative strategy, and even returned to their home markets after the painful experience.Given the background of China's special social and political conditions, SWFs can play an important social and political role in today's China. Having learned from the former failure and the success experience from other SWFS, China's SWFs are on the crossing road re-considering their right way from the perspectives of both international financial markets and domestic social and economical facts. It is of strategic importance to maximize the benefits of SWFs to meet the social economic and political needs.