Sovereign Wealth Funds
If You Build It, They Will Come
China advises US government to invest in infrastructure.
November 3, 2010
Given that my San Francisco Giants won the world series yesterday, I had to sneak a baseball reference into my subject line. But there is a non-baseball related reason for the subject as well: infrastructure. Zhou Yuan, head of asset allocation at China Investment Corporation, had some very interesting comments about the dire state of America’s infrastructure. As we all know too well, the US is in desperate need of new infrastructure investments, which, according to Yuan, could be effectively financed by foreign SWFs:
“We are advocating that the US government start a programme to invest a massive amount of equity, in the form of public and private equity partnership, in US infrastructure…If the conditions are right, and if, on a risk return basis, we believe this is a good investment…But of course, we want to emphasize the fact that we are going to be a passive investor. We’re not here to run anything or to own anything.”
Practically, it makes sense to have these funds investing in US infrastructure. Consider that the American Society of Civil Engineers said in 2009 that the US needed $2.2 trillion worth of investment to bring basic infrastructure into a level of good repair. But, I’m sorry to say, politically and socially, it just seems far fetched at this point.
So let’s get back to thinking about the sheer awesomeness of the Giants…