CIC No.2 set for take-off

The Chinese Government is expected to provide details this month of its new fund – being dubbed the “Industrial CIC” or” CIC 2” – which will centralise oversight of various state-owned businesses.According to a report in the weekly Chinese-language ‘Economic Observer’ the fund, whose actual title is ‘State Assets Management Company’, had been delayed because of negotiations with potential senior management, including a chief executive.

The fund will start with about 10 state-owned companies, which will be added to over time, with a view to better oversee and administer the combined resources between them.

The CIC (China Investment Corporation) was established with $200 billion, a little over half of which is available for investment in financial assets and direct investments. The rest of the funding is made up of the Government’s stakes in large Chinese banks, including the recently floated Agricultural Bank of China and the ICBC. These stakes are held through a CIC subsidiary, Central Huijin.

The newspaper report says: “After the new asset management firm is set up, the biggest change will be that the SASAC will alter its method of supervision of some small centrally-owned enterprises – gradually converting its capital usage to pursue investment returns rather than administrative work.”

The fund is expected to be initially capitalized at 20 billion RMB ($2.95 billion).