Chinese SWF sees euro-zone crisis as chance to snap up infrastructure assets

GLOBAL - The head of the $410bn (€309bn) China Investment Corporation (CIC) has identified the euro-zone debt crisis as an opportunity to acquire infrastructure assets - but said the sovereign wealth fund would not buy Italian or Spanish debt, despite urging from European leaders, without substantial reforms in those markets.

Lou Jiwei reportedly told the Chinese Economists 50 Forum, a think tank, that it would be more appropriate for a long-term investor such as CIC to plough capital into European infrastructure as part of an economic recovery than to acquire risky bonds.

His comments come less than a week after the Chinese Ministry of Commerce forecast that liquid Chinese manufacturers would lead the European investment charge in a bid to compete globally, according to Xinhua, the official news agency.
 
Speaking at the 2012 Diplomats' Economic Forum, head of the ministry's department of European affairs Sun Yongfu described Europe's competitive environment as "comparatively favourable" after earlier accusations of anti-Chinese protectionism in some European countries. 

Ministry official Mei Xinyu said the debt crisis provided favourable buying opportunities as European states began to reach out to China over the past two years.

What Xinhua described as "obsolete" infrastructure has already been a target for the sovereign wealth fund, especially in the UK.

CIC has agreed in principle to invest in a UK national infrastructure plan currently in development. A CIC subsidiary last month acquired 8.7% of UK company Thames Water.
 
China's sovereign wealth fund, like its government, has been cautious in its language, both because of domestic concern over Chinese investment in stricken European economies and because sceptics could view the emphasis on "recovering" economies as carpetbagging.

The news agency this week quoted Wen Jiaobao saying after his meeting with German chancellor Angela Merkel that he was prepared to offer rescue funds, but would not "buy" Europe - a headline that reportedly appeared on the Communist Party's own People's Daily.

In separate news, China Daily reported Friday that the People's Bank of China had acquired a stake in CIC in return for injecting $50bn into the fund.