Why China’s Sovereign Wealth Fund Is Not Interested In EFSF8 November, 2011, 1:05. Posted by Zarathustra
Tags: Economy, Euro Crisis, Europe, Jin Liqun
Jin Liqun, an economist and the Chairman of China Investment Corp (i.e. China’s sovereign wealth fund), talked to Al Jazeera on how they look at investing in European Financial Stability Facility (EFSF). Or, he talked about why the sovereign wealth fund has little interest in investing in EFSF.
Many of the points are fair. For instance, he considers investing in EFSF to help the Eurozone essentially in the same way as investing in any other things. Fair enough. They operate under Chinese law as well as the law of the country they are thinking about investing, and they try to avoid investing in sensitive industry. Fair enough too. So they would invest only as an rational economic agent and would avoid getting their hands dirty with politics. Fair enough.
Then he raised this point: “You cannot come to me, asking me ‘Hey! Why don’t you pump money in this kind of… projects, or investing the banks that are in trouble… we are in trouble, and our two countries are friendly, so why don’t you come in?’, this is actually in stark contrast to the requirement imposed on our sovereign wealth fund”, “the recipient countries should treat sovereign wealth funds fairly… as any other financial investors…”
The host drilled on that further. After some nice and diplomatic gesture, suggesting that China is very supportive of Europe and Eurozone and to reiterated that they look at those investments just like any other investments, Jin Liqun said the troubles in European countries are “the accumulated troubles of the welfare society… labour laws are outdated… incentive systems are totally out of whack… why should some [Eurozone] members’ people have to work until 65 or longer, whereas in some other countries they are happily retired at 55, languishing on the beach? This is unfair… Chinese people are working very hard…”
So they think they can’t get a fair share of return by bailing out Eurozone because some Europeans are lazy.
At the end, he also hope to see emerging economies having more say on global affairs, which is also fair enough.