Chinese authorities are believed to control foreign investment funds worth up to $1.5 trillion, according to an expert. This is much more than the assets managed by the country's sovereign wealth fund.
The State Administration of Foreign Exchange (SAFE), which regulates China's foreign exchange market, reportedly established and manages these massive funds. The funds help China diversify its foreign currency holdings and acquire stakes in strategic companies abroad.
Experts say SAFE's funds are underreported and not included in China's official foreign reserves figures. This could explain why China's large trade surpluses have not significantly increased its reported foreign reserves.
The funds were created to help SAFE expand its influence beyond just managing China's foreign exchange reserves. They focus on developed economies and industrial sectors.
However, the funds also expose China to potential sanctions as most of their assets are in the jurisdiction of the US and its allies. Experts call for more transparency from China regarding these investment vehicles.
In summary, experts argue that Chinese government-managed foreign investment funds worth potentially trillions of dollars remain overlooked when assessing China's economic and strategic ambitions globally. Greater transparency from China could help alleviate such concerns.
