US wary as China's wealth fund seeks to invest big

BEIJING • China's sovereign wealth fund is looking at big bets in the United States. But the US$800 billion (S$1.1 trillion) investment behemoth said it faces an obstacle: the US government.

The fund, the China Investment Corp, has urged the US authorities to allow better access to the market at a time when Chinese deals are facing more scrutiny.

"We hope that the US government will provide us with a more liberal, equal and non-discriminatory investment environment," said Ms Liu Fangyu, the fund's managing director and head of public relations and international cooperation.

In some ways, the fund's interests are aligned with those of the US. The Chinese investor is particularly focused on infrastructure, an area where the Trump administration has been pushing for private players to invest more money. And sovereign wealth funds are a good source of financing for such major, long-term deals.

But the flood of Chinese money into the US has prompted concerns about Beijing's influence.

Some White House officials and lawmakers want to expand the powers of the Committee on Foreign Investment in the US, a multi-agency government panel that can effectively quash deals for national security reasons.

While high-tech investments in areas like defence and the military are particularly delicate, even entertainment and real estate deals are causing concern.

The committee, which includes representatives from the Departments of Defence, State, Justice, Treasury and Homeland Security, reviews deals by sovereign wealth funds and other foreign investors. Although its process is rather opaque, the panel in recent years has blocked deals, many of them in the semiconductor industry.

The Chinese fund knows the investment terrain. The US was the largest investment destination for the fund, with more than US$90 billion, mostly in the financial markets.

A global investor with a vast portfolio, the China Investment Corp is already a player in infrastructure, with projects like London's Heathrow Airport; Thames Water, which supplies the British capital; and the Port of Melbourne in Australia. But regulatory barriers have made such "symbolic investments" difficult in the US, Ms Liu said.

Last year, Chinese investments in the US jumped threefold, to US$46 billion, from the year before, according to the research firm Rhodium Group.


A version of this article appeared in the print edition of The Straits Times on July 13, 2017, with the headline 'US wary as China's wealth fund seeks to invest big'. Print Edition | Subscribe