China Investment Corporation - CIC



A government-sponsored entity of the People's Republic of China that seeks to invest in securities and commodities abroad. The CIC was initially funded with around $200 billion, which originated from the issuance of long-term treasury bonds by the People's Bank of China (PBOC). The bond proceeds were then converted into dollars through the foreign exchange market.

|||The CIC provides a vehicle for investing the massive trade surplus that exists in the nation. The CIC will receive regular inflows of capital to help suppress this figure.

Speculations abound as to how the CIC will impact the world financial markets. China has been a large investor in U.S. Treasuries for many years, but hopes to earn a higher return on its foreign investments by diving into stocks, bonds and commodities such as oil and gold. Critics point to general corruption in China's political and economic system and wonder what kind of regulations will exist within the CIC to prevent it from being run in a similar fashion.

One of the first announced investments of the CIC was a 10% stake in U.S.-based private equity firm Blackstone Group, a move that sparked concern on Wall Street at the prospect of Chinese influence on U.S. corporate operations through the stock market.