Investing a nation's wealth wisely

New frontiers

Since its inception in 2007, CIC has strived to generate higher returns on China's huge foreign exchange reserves. Most of its investments have been spread across a range of countries such as Australia, Brazil, France, Russia and the United Kingdom.

Last year, nearly 27.8 percent of the equity investments CIC made overseas were in advanced economies other than the US, with Europe being the mainstay. The corresponding figure for such investment in 2011 was 20.6 percent.

A look at the direct investment projects of CIC last year shows that five out of the six projects were in Europe, including France, Russia and the UK. In 2012, 23 percent of CIC's equity purchases came from emerging markets, especially in the Asia-Pacific region. The proportion was 29.6 percent in 2011. But that seems to be changing, as Africa and Europe slowly become new destinations for the fund.

In November last year, CIC invested 450 million pounds ($720 million) for a 10 percent stake in Heathrow Airport Holdings Ltd, a prominent airport operator in the UK and one of the busiest international air hubs in Europe.

It also invested 276 million pounds in January last year for an 8.68 percent stake in Thames Water Utilities Ltd, a London-based private utility company responsible for public water supply and waste water treatment.

"CIC perceives the UK as a destination of choice for long-term investment because of its business-friendly environment and sound legal framework," the company's annual report said.

Russia is another region in Europe where the fund has invested in several resource projects. Last year, the CIC signed a Memorandum of Understanding with Vnesheconombank in Moscow for investment cooperation in infrastructure construction and development programs in the Russian Far East. The fund also injected $425 million into Polyus Gold International Ltd, the largest gold producer in Russia.