Central Huijin Investment

Central Huijin Investment Co., Ltd. is a Chinese sovereign fund formerly owned by the government of the People's Republic of China. Established in 2003, five years later it became a wholly-owned subsidiary of China Investment Corporation, with its own Board of Directors and Board of Supervisors. Central Huijin's principal shareholder rights are exercised on behalf of the State Council. Central Huijin is an organization by which the Chinese government can act as a shareholder for the "big four" state-owned banks, thereby improving corporate governance and initiating reforms of the banking industry. History China's first sovereign fund, Central Huijin was established in 2003. It was created as a special purpose vehicle incorporated as a limited liability company. Its mission was to recapitalize China's banks. Research Zongyuan Zoe Liu writes that using a sovereign fund like Central Huijin gave "the CPC the maximum degree of flexibility to decide when it would leave the market to its own devices and when it would forcefully intervene to protect the state's interest." Between 2003 and 2006, Central Huijin functioned as a quasi-state-owned private equity fund. In 2005, the State Council approved the Comprehensive Plan for the Consolidation of Brokerage Firms, with the goal of implementing new regulatory mechanisms and rooting out misconduct in the securities field. Central Huijin wholly-owned subsidiary Jianyin Investment, along with the China Securities Investor Protection Fund, were tasked by the State Council with restructuring Chinese brokerages. During the period 2004-2007, Central Huijin and Jianyin Investment acquired controlling stakes in ten large Chinese brokerage firms, totaling at that time one-third of the Chinese securities industry. This in turn gave Central Huijin's parent institution, the People's Bank of China, significant power in the securities industry despite not having formal legal oversight. Central Huijin's track record of restructuring financial institutions has largely been viewed as a success. Central Huijin's role has now expanded beyond its original mission. In 2008, Central Huijin Investment was acquired from the State Administration of Foreign Exchange by the China Investment Corporation for roughly $67 billion. It manages more than two-thirds of CIC's assets.