Research On The Investment Operation Of The Chinese Sovereign Wealth Fund

In recent years, due to the continuously increasing of the mobility of global capital as well as rapid growth in foreign exchange reserves of resource-rich countries and countries of trade surplus, sovereign wealth fund becomes an effective way for various countries to improve the income of foreign exchange assets and optimize foreign exchange path. Russia. India, Brazil, South Korea and other countrics of cmcrging market have set up sovereign wealth funds with sufficient foreign exchange reserves, and actively participate in international capital market.In September 2007, CIC was established as sovereign wealth fund of China. In the early period. CIC drew widespread attention in the international capital market by the huge size of funds. Since the financial crisis, due to the slow growth of developed economies and further declines of emerging economies, the world economic recovery was weak and international trade grew at a slow rate. The double engines, emerging and developed economies, became weakened in power. The interest-rate rise cycle of the started, and the foreign exchange market of some emerging economies fluctuated greatly, the prices of commodities with crude oil as the representative continued to run low, China’s economic development also entered the new normal stage. In this context, it is of great significance for China’s foreign exchange reserves maintenances and increases the value as well as protect the safety of national economy under the new economic normal how the CIC improve its investment and operation level.This paper, with sovereign wealth fund as the study subject, first combs the literature by domestic and foreign scholars on properties, historical background, development status, investment and operation and other aspects of the sovereign wealth fund, sums up the overview and the dcvclopmcnt status of the world’s sovereign wealth funds and combs the theories related to investment and operations of the sovereign wealth fund. The paper then focuses on CIC and point out the current situation of CIC’s investment and operation and a few problems through analysis on the typical case and the latest data of CIC, including the great earnings pressure faced by investment and operation, lower degree of investment diversification, defects in risk management systems and the imperfect information disclosure mechanism.Finally, the paper provides the following recommendations for the company’s investment and operations:First, clearly defining positioning of investments. The CIC shall explore an effective model to achieve the joint export of financial capital and industrial capital while ensure the maintenance and appreciation of values of foreign assets. Second, carefully responding to market challenges and making efforts to enhance investment income. Third, strengthening corporate governance and risk management system construction.Fourth, optimization of ways of information disclosure and enhancing the level of international cooperation.