The FINANCIAL — German Chancellor Angela Merkel asked China Investment Corp. and other investors to buy Italian and Spanish debt on a recent trip to China, but more reform is needed in those debt-stricken countries before China will invest in them, the chief of the country's sovereign wealth fund said Monday.
Speaking at a briefing in Beijing, Lou Jiwei, chairman of CIC, said China has achieved a soft landing in its economy, but still faces risks such as high inflation.
Lou also said a recession in the European Union is inevitable as the debt crisis continues to spread, and world economy faces huge downside risks. But the fund also sees opportunities in infrastructure and real industrial projects, he said.
CIC itself doesn't invest in large amounts of sovereign debt. According to London Stock Exchange, the fund was set up in 2007 with $200 billion of foreign-exchange reserves to help China diversify its portfolio by investing in overseas equities and other assets. CIC's assets had risen to $410 billion as of the end of 2010, according to the fund's annual report.