We have previously noted China’s move to begin recycling $210 billion or so of its $1 trillion in forex reserves. China has now made its choice of the man who will be among the the world’s largest asset managers. (Fidelity investments, for example, has over $1 trillion under management.) However, we see no evidence in this article that he has any previous significant experience in asset management. WSJ:

China has appointed a vice minister of finance to head preparations for a new agency that will invest a portion of the country’s foreign-exchange reserves, according to a person familiar with the matter, putting Beijing a step closer to diversifying its $1.07 trillion stockpile of hard currency. The government is yet to announce the appointment publicly but has said internally that Vice Finance Minister Lou Jiwei will become deputy secretary-general of the State Council, China’s cabinet, and will lead preparations for the overseas investment agency, the person said. The appointment signals that Mr. Lou will likely take charge of the institution once it is established, the person said…

Mr. Lou, 56 years old, has served as one of six vice ministers of finance since 1998. He holds a master’s degree in economics from the Chinese Academy of Social Sciences, a prominent government think tank and educational institution, and has served in numerous financial-policy positions in the government. Immediately prior to becoming vice minister of finance, he was a vice governor of the poor southwestern province of Guizhou…

The appointment of a senior official from the Ministry of Finance to head the agency appears to be an effort to even the balance of power in the financial sector between the ministry and the People’s Bank of China, the country’s central bank. A former head of the central bank’s research department, Xie Ping, was selected by China’s leaders in November 2004 to take the top post at Central Huijin. The central bank is widely seen among domestic officials as a stronger advocate of faster liberalization and further opening of the financial sector to foreign investment than is the Ministry of Finance.

Perhaps Mr. Lou will be an excellent asset manager; however, his preparation for this job is unclear, and the WSJ piece takes pains to point out the political aspects of the appointment. We hope he’s up to the job; it’s a big task and it is getting bigger and more important every day. We note the urgency of redeploying some of China’s foreign exchange assets. Its exports increased year over year in January by 33%, and its growth roars ahead like a freight train. Peoples Daily:

Despite the government’s cooling measures, China’s gross domestic product (GDP) surged by 10.7 percent year-on-year to reach 20.94 trillion yuan (2.7 trillion U.S. dollars) last year. It was the fourth straight annual double-digit growth rate, driven by hefty investment and rocketing trade, both of which registered a 24 percent year-on-year growth. The economy grew 10 percent in 2003, 10.1 percent in 2004, and 10.4 percent in 2005.

It is hard to believe that China really has a handle on growth this fast and this vast.

This entry was posted on Friday, February 16th, 2007 at 8:22 am and is filed under business, China, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.