China’s SWF to invest more in agriculture

19 June 2014   Category: News, Asia, China, Global   By Daniel Shane

China’s sovereign wealth fund (SWF), which manages about US$575 billion in assets, is seeking to invest more in agricultural projects, according to its chairman.

In an opinion piece for London’s Financial Times, China Investment Corporation’s (CIC) Ding Xuedong wrote that it was looking to partner with governments and other institutions around the world as it sought to invest more “across the entire value chain” of food production.

Mr. Ding said that the industry could potentially offer a way to diversify CIC’s investment portfolio and provide steady returns.

"We are keen to invest more across the entire value chain – in partnership with governments, multilateral organisations and like-minded institutional investors – in areas that will help to unlock the industry's potential, increase the food supply and offer attractive returns," he wrote. "We believe the agriculture sector offers stability, a way of hedging against inflation and a device for spreading risk."

Mr. Ding said that investments from the CIC would also aid in food security and contribution to job creation. Areas that it will focus on will include agricultural sectors such as irrigation, animal feed production and land transformation.

Meanwhile, the results of an investigation by China’s National Audit Office (NAO) revealed that CIC mismanagement and dereliction of duty by executives was to blame for some overseas losses incurred by the SWF between 2008 and last year.

The report pinned the blame on 12 unspecified investments abroad made by the fund during these years. Half of them turned out to be unprofitable, four had unrealised losses, and the remaining two could still lose money, the Chinese language audit said.

The NAO also blamed the CIC’s selection of external fund managers, which it described as “not very standard”, without elaborating.

Mr. Ding replaced CIC’s founding chairman and chief executive officer Lou Jiwei last year.