Gold will bounce back, Greek debt is a buy, and other quotables from the heads of China’s sovereign wealth fund

April 17, 2013
April 17, 2013

Gao Xiqing, president of China Investment Corp., the country’s $500-billion sovereign wealth fund, recently denounced Japan thusly (paywall): “Treating the neighbors as your garbage bin and starting a currency war would not only be dangerous for others but eventually be bad for yourself.”

But today, another CIC head, Jin Liqun, blew off those concerns: “Monetary easing … is a necessary but not sufficient condition,” said Jin, who chairs CIC’s supervisory committee (paywall).

It’s hard to know why they differ—or even whether they differ. Both Gao and Jin are chatty guys, and the media quotes them a lot. That’s probably because, unlike China’s generally wooden political elite, they are comfortable with the media, speak great English, and have dry wits. Known as the public face of the CIC, Gao earned a law degree from Duke in the 1980s and was the first Chinese person to pass the New York bar. Jin, meanwhile, was a scholar of English poetry (he’s still into it) who studied economics at Boston University, and worked at the Asian Development Bank and the World Bank before joining CIC’s board of supervisors.

Here are some quotables from two of China’s most voluble dignitaries:

On the wisdom of investing in euro zone debt: “This is a very good time for Chinese investors to buy debt of euro members…. It’s a good time for Chinese to buy Euro bonds. As private investor I would buy Greek, Italian bonds.” —Jin

On the CIC’s next property investment (paywall): “The White House.” —Gao

On investing in gold (paywall) after the crash“Relatively speaking, the supply of gold will not be that much, so over the long term gold prices should go up….We invest in gold as part of investment instruments, but not on a big scale. We have been doing well on this aspect.” —Jin

On being rebuffed (paywall) investing in the US“I’m not diminishing it, but I’m not hanging everything in one tree. The US is not one of the most welcoming countries in the world for us.” —Gao. “I hope you will not panic and say ‘China is buying us out.’ We are passive investors, we do not meddle, you should feel relaxed.” —Jin

On investment opportunities in European companies: “European countries have very good technology. There have well-managed companies that are having difficulties because of macroeconomic problems.” —Jin

On concerns about the euro zone’s austerity programs: “The fact the public are taking to the streets and resorting to violence indicates the general public’s tolerance has hit its limits…. Unions are now involved in organised protests; demonstrations and strikes. It smacks of the 1930s.” —Jin

On the draw of corporate finance and law: “Individually, everyone needs to be compensated. But collectively, this directs the resources of the country. It distorts the talents of the country. The best and brightest minds go to lawyering, go to MBA’s. And that affects our country, too! Many of the brightest youngsters come to me and say, ‘Okay, I want to go to the US and get into business school, or law school.’ I say, ‘Why? Why not science and engineering?'” —Gao

On solar energy: “Chinese solar companies made money because of the subsidy. They are not in-substitutable, anyone can do it. We are still waiting for the breakthrough technology.” —Jin

On needing more money to invest“We are not rushing to get more money at this moment, but eventually when we invest all of the resources. I do believe CIC will need new money in the future.” —Jin

On CIC’s notorious investments in Blackstone and Morgan Stanley: “We have a PR department, which collects all the comments about us, from Chinese newspapers and the Web. Every night, I try to pick a time when I’m in a relatively good mood to read it, because most of the comments are very critical of us. Recently we increased our holdings in Blackstone a little bit. Now we’re increasing a little bit our holdings in Morgan Stanley, so as not to be diluted by the Japanese. People here hate it. They come out and say, ‘Why the hell are you trying to save those people? You are the representative of the poor people eating porridge, and you’re saving people eating shark fins!’ It’s always that sort of thing.” —Gao

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