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China’s Sovereign Fund May Give ‘Indirect’ Support to Europe

Jesse Wang, executive vice president of China Investment Corp., listens during the VTB Capital Investment Forum in Moscow, Russia. Photographer: Alexander Zemlianichenko Jr/Bloomberg
Jesse Wang, executive vice president of China Investment Corp., listens during the VTB Capital Investment Forum in Moscow, Russia. Photographer: Alexander Zemlianichenko Jr/Bloomberg

Nov. 25 (Bloomberg) -- China’s sovereign wealth fund may give “indirect” support to Europe through investments without being the nation’s main route for any aid, said Jesse Wang, the executive vice president of China Investment Corp.

The fund “wouldn’t be the main channel” if China helps tackle the sovereign-debt crisis, Wang said in an interview at a forum in Beijing yesterday. “However, if during such a process there are good investment opportunities in Europe and if CIC’s investment helped the destination company or country to recover and developed the economy, that would be indirect support.”

European leaders are looking to China, the holder of the world’s largest foreign-exchange reserves at $3.2 trillion, as a source of funds as the region’s crisis threatens to trigger a global slump. China is among countries that may be willing to support Europe through the International Monetary Fund if policy makers agree on a plan, World Bank President Robert Zoellick said in a Nov. 17 interview.

In tackling the crisis, “China would like to be seen as a constructive force rather than as a savior,” said Ding Shuang, a Hong Kong-based economist for Citigroup Inc., who formerly worked at the IMF and the Chinese central bank. “The nation may aid Europe through the IMF as a safer method” than other alternatives, he said.

Stocks Slide

Asian stocks fell for a third day today on signs that Europe’s debt crisis is yet to be contained, with the MSCI Asia Pacific Index down 0.6 percent as of 11:22 a.m. in Tokyo. Hungary lost its investment-grade rating at Moody’s Investors Service after 15 years, while German Chancellor Angela Merkel sent equity markets tumbling by rejecting joint euro-area bonds.

CIC managed $409.6 billion at the end of 2010.

“As a commercial entity, CIC is seeking reasonable returns with controllable risks,” Wang said. He cited an investment in the exploration and production business of Paris-based GDF Suez SA, Europe’s largest natural-gas network operator, as an example of what appeals.

“CIC is under no obligation to follow the government’s policy orders in its operations because it’s a commercial entity,” Wang said. “If the government carried out certain policy moves, CIC usually wouldn’t participate because it has different operational targets and risk-taking capabilities.”

Asked if China will buy European bonds, he said the Chinese government is studying “which way and through which products” to support the region.

On Germany’s failure to sell all the 10-year bonds offered at an auction Nov. 23, he said: “One shouldn’t rush to some decisive judgment about the sales or worry that the debt crisis has spread to the core euro zone.”

To contact Bloomberg News staff for this story: Li Yanping in Beijing at yli16@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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