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Central Huijin Investment

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Central Huijin Investment Ltd. is a Chinese sovereign fund company under the China Investment Corporation owned by the State Council of China.

Central Huijin Investment Ltd.
Native name
中央汇金投资有限责任公司
Company typeSubsidiary
IndustryInvestment company
Founded2003; 21 years ago (2003), in Beijing, China
Headquarters
Beijing
,
China
Area served
People's Republic of China
Key people
Ding Xuedong
(Chairman & CEO)
ParentChina Investment Corporation
Websitewww.huijin-inv.cn/en/ Edit this at Wikidata
Central Huijin Investment Co., Ltd.
Simplified Chinese中央汇金投资有限责任公司
Traditional Chinese中央匯金投資有限責任公司
Literal meaningCentral Foreign Exchange Investment Company Limited
Transcriptions
Standard Mandarin
Hanyu PinyinZhōngYāng HuìJīn TóuZī YǒuXiàn ZéRèn GōngSī
Central Huijin
Simplified Chinese中央汇金
Traditional Chinese中央匯金
Transcriptions
Standard Mandarin
Hanyu PinyinZhōngYāng HuìJīn

Established in 2003 by the People's Bank of China, five years later it became a wholly-owned subsidiary of China Investment Corporation, with its own Board of Directors and Board of Supervisors.[1] Central Huijin's principal shareholder rights are exercised on behalf of the State Council.[2] 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.[3]

History

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People's Bank of China

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Central Huijin was established in 2003 by the People's Bank of China.[4]: 13  It was created as a special purpose vehicle incorporated as a limited liability company.[4]: 13  Its mission was to recapitalize China's banks.[4]: 13  Researcher 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."[4]: 13  Between 2003 and 2006, Central Huijin functioned as a quasi-state-owned private equity fund.[4]

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.[4]: 85  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.[4]: 85  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.[4]: 86  The brokerages recapitalized in 2005 included Galaxy Securities, China Southern Securities (which was subsequently liquidated),[5] Shenyin & Wanguo Securities, and Guotai Junan Securities.[6]: 283  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.[4]: 86  Central Huijin's track record of restructuring financial institutions has largely been viewed as a success.[4]: 89 

China Investment Corporation

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In 2008, Central Huijin Investment was acquired from the State Administration of Foreign Exchange by the China Investment Corporation for roughly $67 billion.[7] It manages more than two-thirds of CIC's assets.[4]: 87  Central Huijin functions as the "shareholder in chief" of the entire financial sector, a role that allows the state to participate in the market consistent with global norms of corporate ownership structure without letting go of state oversight of strategic enterprises and sectors.[4]: 14 

Central Huijin indirectly supports the Belt and Road Initiative through its support of domestic financial institutions, such as policy banks or state-owned commercial banks, which in turn fund BRI projects.[4]: 124 

In December 2019, Central Huijin bailed out Hengfeng Bank.[4]: 139 

Leadership

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Initially, Guo Shuqing was the chairman of Central Huijin, and its general manager was Xie Ping, a former chief of the PBC's Research Bureau and director of its Financial Stability Bureau (also established in 2003).[6]: 280–281  More recently under the CIC, the board of directors of Central Huijin has consisted of Ding Xuedong (Chairman & CEO), Li Jiange (Vice Chairman), and Bai Tao (Executive Director and President).[citation needed]

Subsidiaries

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As of 31 December 2015

Investments

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As of 31 December 2020, Central Huijin held shares in 17 financial institutions: China Development Bank (holding 34.68 percent of its shares as of 2019),[11]: 85  Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, China Everbright Group, Hengfeng Bank, China Export & Credit Insurance Corporation, China Reinsurance (Group) Corporation, New China Life Insurance Co., China Jianyin Investment Ltd., China Galaxy Financial Holdings Co. Ltd., Shenwan Hongyuan, China International Capital Corporation, China Securities, China Galaxy Asset Management Co. Ltd., and Guotai Junan Investment Management Co. Ltd.[citation needed] Central Huijin requires that it be able to seat one third of the directors of the boards on its banks.[4]: 88 

It owns majority stakes in all big four Chinese banks (Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China), but does not own shares in the smaller joint-stock commercial banks which are largely owned by local governments.

As of 2023, Central Huijin is the largest shareholder of the vast majority of Chinese financial institutions.[4]: 23 

As of 31 December 2015

References

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  1. ^ Gao Jie (2013): China's Bank Reform and the Roles of Sovereign Wealth Fund, in Hummel, Detlev (Ed.): The Euro Financial Crisis. Impacts on Banking, Capital Markets, and Regulation. Report of the International Workshop in Potsdam on July 20/21, 2012. Universitätsverlag Potsdam, p.77-9.
  2. ^ Gao Jie (2013), p. 79.
  3. ^ Inside CCB Archived 2007-09-29 at the Wayback Machine
  4. ^ a b c d e f g h i j k l m n o p Liu, Zongyuan Zoe (2023). Sovereign Funds: How the Communist Party of China Finances its Global Ambitions. The Belknap Press of Harvard University Press. doi:10.2307/jj.2915805. ISBN 9780674271913. JSTOR jj.2915805.
  5. ^ Hu Yuanyuan (18 August 2006). "Securities brokerage declared bankrupt". China Daily.
  6. ^ a b Stephen Bell & Hui Feng (2013). The Rise of the People's Bank of China: The Politics of Institutional Change. Harvard University Press.
  7. ^ Jamil Anderlini, China investment arm emerges from shadows, Financial Times, 5 January 2008.
  8. ^ "中国光大集团股份公司2016年度第一期中期票据发行文件" [China Everbright Group 2016 lot 1 medium term bond issue document]. China Everbright Group. archive of Shanghai Clearing House. 30 August 2016. Archived from the original on 17 November 2020. Retrieved 18 October 2016.
  9. ^ "2016 Interim Report" (PDF). Everbright Securities. archive of Hong Kong Stock Exchange. 26 September 2016. Retrieved 17 October 2016.
  10. ^ "2015 Annual Report" (PDF). China Everbright Bank. archive of Hong Kong Stock Exchange. 29 April 2016. Retrieved 17 October 2016.
  11. ^ Chen, Muyang (2024). The Latecomer's Rise: Policy Banks and the Globalization of China's Development Finance. Ithaca and London: Cornell University Press. ISBN 9781501775857. JSTOR 10.7591/jj.6230186.
  12. ^ "2015 Annual Report" (PDF). China Pacific Insurance. Hong Kong Stock Exchange. 27 April 2016. Retrieved 20 October 2016.
  13. ^ "2015 Annual Report" (PDF). New China Life Insurance. Hong Kong Stock Exchange. 21 April 2016. Retrieved 7 January 2017.
  14. ^ "2015 Annual Report" (PDF). Ping An Insurance. Hong Kong Stock Exchange. 29 March 2016. Retrieved 20 October 2016.
  15. ^ "Pospectus" (PDF). CSC Financial. Hong Kong Stock Exchange. 29 November 2016. Retrieved 29 November 2016.
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