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China's sovereign wealth fund to focus on agriculture, technology and infrastructure

Out-Law News | 20 Jun 2014 | 11:23 am | 2 min. read

China’s sovereign wealth fund is shifting its focus to invest in agriculture and global food supplies according to China Investment Corp (CIC) chairman Ding Xuedong.

CIC, which was established in 2007, has recently focused its attention on energy, metals, mining and the other commodities required to support China’s industrial rise.

But now the $650 billion sovereign wealth fund wants to invest more in agriculture around the world and “across the entire value chain” Ding has said in an opinion piece in the Financial Times. In addition, CIC will focus on technology, infrastructure and real estate investments which offer long-term stable returns.

"China Investment Corporation is a long-term financial investor with a diversified portfolio," said Ding. "We believe the agriculture sector offers stability, a way of hedging against inflation and a device for spreading risk. We are keen to invest more across the entire value chain – in partnership with governments, multilateral organisations and like-minded institutional investors – in areas that will help to unlock the industry’s potential, increase the food supply and offer attractive returns."

"While we are focusing on existing assets, we are also keen to work with the right partners to invest in greenfield projects," Ding said. "Food security is a global issue that no one can afford to ignore. The countries of the world must do more to make sure that their growing populations will have enough food. However, an unmet need is an investor’s opportunity. And investors everywhere will prosper if they can help the people of the world meet one of the most basic needs of all."

The fund’s new strategy is in line with the priorities of the current Chinese administration which wants to shift the economy from one which is reliant on infrastructure investment and towards a primarily consumption driven model, with an emphasis on rising living standards, said the newspaper.

According to Ding, who became chairman of CIC a year ago, China aims to create partnerships with governments, multilateral organisations and other institutional investors as it moves forwards with the strategy. He said that the government is keen to “shore up food security in places that we invest in and contribute our share to local job creation and economic growth”.

CIC will pay particular attention to areas of agriculture such as irrigation, land transformation and animal feed production, he said.

A number of Chinese companies, most of them state-owned, have invested heavily in farmland and food production in Africa, Asia and Latin America and other parts of the world in recent years as China experiences increased demand for meat, dairy, grains and other soft commodities, said the Financial Times. According to the newspaper CIC had around $650bn of assets under management at the end of 2013, around $200bn of which was invested outside China. Much of the rest is made up of CIC’s holdings in China’s largest financial institutions, which the fund holds on behalf of the state, said the newspaper.

Ding is currently accompanying Chinese premier Li Keqiang on his first official visit to the UK as premier.