LDN - Business

China's sovereign fund appoints new North America chief -sources

[November 10, 2023] By Echo Wang

NEW YORK (Reuters) - China Investment Corp (CIC) has hired a new North America head for its New York office, two people familiar with the matter said, filling a months-long vacancy and showing the sovereign wealth fund wants to maintain the outpost despite flaring U.S.-Sino tensions.

New York is the $1.35 trillion fund's only office outside mainland China besides Hong Kong. It was set up in 2015 to help it manage its U.S. assets. Since then, Washington has cracked down on many Chinese investments it deems a national security risk.

CIC asked Bai Xiaoqing, who was in charge of some of its private equity investments from Beijing, to move to New York for the North America head role, the sources said, requesting anonymity because the move has not been publicly announced.

She succeeds Zhang Hong, who left CIC at the end of last year and moved back to China following six years in the role, one of the sources added. The reason behind Zhang's departure could not be learned.

CIC, Bai and Zhang did not respond to requests for comment.

The Committee on Foreign Investment in the United States, which reviews deals for national security concerns, has been blocking Chinese investments it believes may erode U.S. technological edge or jeopardize data security. U.S. authorities have been especially suspicious of investments originating from entities close to China's communist government, like CIC.

As a result, Chinese investments have dropped from a peak of 63 deals totaling $53.5 billion in 2016 to just three deals collectively worth only $400 million this year, according to the American Enterprise Institute, which collates data on investments of more than $95 million.

Still, CIC's most recent disclosures show some of its U.S. holdings remain sizeable. U.S. stocks made up 61.48% of the overseas public market equities it held in 2021, according to its latest annual report. Public equities accounted for 35.4% of its total portfolio.

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The headquarter building of China Investment Corporation (CIC) is pictured in Beijing, China, March 1, 2016. REUTERS/Jason Lee/File Photo

CIC is also a significant investor in U.S. private equity funds, as so-called alternative assets comprise almost half of its portfolio. One of its most prominent investments has been a $2.5 billion Goldman Sachs Group Inc private equity fund aimed at investing in companies that can benefit from closer U.S.-China ties.

Launched in 2017 and dubbed the China-U.S. Industrial Cooperation Fund, it has invested in several companies in the United States and Britain.

CIC has also cultivated ties with BlackRock Inc, the world's largest asset manager. It said last month that CIC Chairman Peng Chun met BlackRock Chief Executive Larry Fink to discuss "cooperation on multiple fronts". It did not provide further details, and a BlackRock spokesperson did not respond to questions about the meeting.

Bai joined CIC in 2007. She previously worked for China's Ministry of Finance for over 12 years and served as deputy director, according to the Milken Institute's website.

Another reminder that China continues to be a major investor in U.S. assets came on Thursday, when a ransomware attack on Industrial and Commercial Bank of China disrupted trading in the U.S. Treasury market.

(Reporting by Echo Wang in New York and Roxanne Liu in Beijing; Additional reporting by Kane Wu in Hong Kong; Editing by Greg Roumeliotis and Edwina Gibbs)

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