Despite reports of capital controls and a slackening in outbound investment, the head of China’s largest sovereign wealth fund expects the guardian of China’s foreign reserves to invest more in the US in 2017 than it did in 2016.
China Investment Corporation (CIC) is looking for more opportunities in alternative investments in the US, including private equity and hedge funds, the fund’s chairman, Ding Xuedong, told the Asian Financial Forum in Hong Kong on Monday, according to an account in Reuters.
Low returns in public markets are said to be driving the fund, which had more than $813 billion under management in 2015, to look for higher yields in alternatives. The fund recorded a negative return on its investments in 2015 due in part to sliding share values on public markets.
To date, CIC has been China’s largest buyer of overseas real estate, but only began pursuing opportunities in the US property market last year. CIC was one of the biggest investors in New York real estate last year, making two investments in Manhattan for a combined $1.7 billion, including spending more than $1 billion in December to purchase a 45 percent stake in a building in New York’s iconic Rockefeller Center.
The statement by Ding comes despite the Chinese Academy of Social Sciences predicting in a report this month that China’s outbound investment trend would slide backwards this year. CASS, which is controlled by the central government, predicts that tighter control of capital will restrict total cross-border investment by Chinese companies to around $118 billion in 2017. Outbound Chinese investment reached a record $170 billion in 2016 according to recent estimates by senior government officials.