Injection to Financial Institutions a Possibility

Although operated in commercial patterns, the fund bears certain social responsibilities at the same time, and therefore need establish what Lou identifies as a positive public image. In Lou’s words, what the fund strives for is “reasonable returns but not sheer economic interests”.

More importantly, the fund will work “as a platform for stabilizing the market”. Many independent wealth funds fulfilled this function when they injected capital to major domestic financial institutions affected by the US subprime mortgage crisis, Lou explains, adding that this is not meant for public welfare, but for long-term investment.

From this, it seems reasonable to infer that the CIC will work together with the central bank and share its responsibility of supporting stability in the financial markets in the future.

Unlike the Central Huijin, Lou says, CIC will try to be more transparent in operation under the condition that commercial interests are not influenced.

Talent Bottleneck: Team, not Stars, Wanted

Presently the fund is preoccupied with establishing a solid corporate governance structure, including well-developed auditing and supervising systems for both boards of directors and supervisors, an international counseling committee, a decision-making committee, a risk-evaluation committee, and others to be made up of experienced investors.

But Lou admits that it takes time to establish such a talent system. The fund is now recruiting staff on a global scale, meanwhile searching for suitable Chinese candidates via headhunters.

As for the criteria for selecting candidates, Lou stresses, “We don’t want stars. What we appreciate is teamwork.”

According to publicized plans, the 1.55 trillion yuan that Ministry of Finance has previously injected into CIC will be available before the end of the year. And the CIC now is in an increasingly urgent need to invest abroad. But Lou affirms that large investments won’t be possible until a mature talent team is developed.

All evidence seems to indicate that human resources are the biggest problem CIC is facing at the moment.