Serious Money: China's $200 billion equity fund goes to work

On Tuesday July 17, 2007 Charlie Rose did an interview with Jesse Wang, Chairman of China Jianyin Investment Ltd. about China's foray into equities and the recent investment of $3 billion into Blackstone Group L.P (NYSE: BX). Here are some of the primary issues that were discussed by Mr. Wang.

1. China formed a government sponsored investment entity with $200 billion of it's $1.3 trillion (and growing) capital reserves to allow them to diversify and receive higher long term returns.
2. Although they have invested $3 billion in Blackstone, they have not fully developed their business plan for the new fund. The timing of the investment was driven by the timing of the Blackstone IPO and the opportunity afforded them. They will have no say in how the money is invested or how the company is run. They also have an exclusivity clause preventing them from investing in any competing companies for one year.
3. It is their intention to invest the money strictly in equities, as investors, over a long period of time, which could be decades.
4. They do not see putting this money to work inside of China because they are concerned that this would only add fuel to an already over heated market.
5. They are aware of the potential to create market volatility if they are not cautious in how they place the funds, and will endeavor to prevent this from happening.
6. They are aware of American (and others) apprehension about Chinese competition, economic power and the effects of them acquiring certain types of assets. They will most likely make more passive investments in long term growth opportunities where they see good value and not acquire entire companies, although this was not ruled out.