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China's $800 Billion Sovereign Wealth Fund Seeks More US Access – New York Times

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BEIJING — China’s $800 billion sovereign wealth fund said on Tuesday that it wanted to make more big bets in America but that it faced an obstacle: The United States government was making direct investment too difficult.

The fund, China Investment Corporation, urged the United States to allow better access to its market, even as American lawmakers call for increased scrutiny of Chinese deals.

“We hope that the U.S. government will provide us with a more liberal, equal and nondiscriminatory investment environment,” said Liu Fangyu, the fund’s managing director and head of public relations and international cooperation.

The China Investment Corporation has invested in infrastructure projects like Heathrow Airport, serving London; Thames Water, London’s water supplier; and the Port of Melbourne in Australia. But regulatory barriers have made such “symbolic investments” difficult in America, Ms. Liu said.

Nonetheless, Ms. Liu said, the United States was the largest investment destination for the fund, with more than $90 billion invested, nearly all of it in financial markets. In January, Ding Xuedong, the fund’s chairman at the time, was quoted as saying that the fund wanted to invest in real estate, infrastructure and technology in the United States, according to The Paper, a state-funded Chinese news website.

At the Asian Financial Forum that month, Mr. Ding said that President Trump’s plans to rebuild America’s infrastructure would almost certainly require billions of dollars in foreign funding, making it an attractive investment destination, according to The South China Morning Post.

Li Weiwei, a director of the fund’s public relations, said on Tuesday that it had invested in several office buildings and logistics businesses in the United States, though she said she could not provide a “detailed answer” on the projects.

In its 2016 annual report published on Tuesday, China Investment Corporation said it earned a 6.2 percent net return on its overseas investments, raising its assets to $813.5 billion. The fund was set up in 2007 to diversify China’s foreign-exchange reserves, the world’s largest, which stand around $3.1 trillion.

China’s government and companies have repeatedly criticized the United States’ investment regulations, saying the country imposed unfair restrictions on Chinese funding. In 2015, President Xi Jinping raised the issue with the United States, saying Washington should relax restrictions on high-tech exports and make it easier to invest.

Despite this, Chinese buyers are spending more in the United States, acquiring buildings, factories and movie theater chains. In 2016, Chinese investment in America jumped threefold, to $46 billion, from the year before, according to the research firm Rhodium Group.

Some deals have been in potentially sensitive areas, like semiconductors, which are crucial for many high-tech projects, including those related to the military. Those have been blocked by the Committee on Foreign Investment in the United States, or Cfius, a panel that can effectively stop foreign deals for American companies on national security grounds.

The remarks by the fund’s leaders come as American lawmakers from both parties are pushing to increase scrutiny of Chinese investments in America. Some say they worry the investments could help China bolster its technological and military capabilities at the United States’ expense.

But Ms. Liu said she was optimistic that the new administration “will provide us more investment opportunities.” She pointed to Mr. Xi’s visit in April to Mar-a-Lago, Mr. Trump’s club in Palm Beach, Fla., as a sign that relations were on a positive track.

In May, the fund opened a representative office in New York to engage with the United States government and regulatory agencies, according to Ms. Liu.

Mr. Trump, who initially struck a conciliatory tone in relations with China after meeting Mr. Xi, is under pressure to improve the investment environment for American companies in China. In recent years, American businesses have complained bitterly about unequal access to the Chinese market.

“Any Chinese sovereign investment must be scrutinized. That’s not to say the answer should be no to everything. But much greater questions need to be asked,” said Fraser Howie, a former banker in Asia who has helped write three books on the Chinese financial system. “It’s not for America to satisfy their diversification requirements. They are a sovereign wealth fund; they are a government foreign-reserve-backed fund of the People’s Republic of China. They are, by definition, political.”

Many lobbying groups have also urged the Trump administration to push for reciprocity, meaning that if American companies are bound by restrictions in China, their Chinese counterparts should be subject to the same limits in the United States.

Both countries said months ago they would create an action plan for trade cooperation within 100 days; the deadline is Sunday. But relations between the two countries cooled after Mr. Trump asserted that China was not doing enough to curb North Korea’s nuclear ambitions, and it is unclear whether the Trump administration will take a tougher stance on trade and investment with China.