place at the head of the table, Lee silently greeted each committee member with a smile and a look from his glacier-blue eyes. The meeting followed a strict agenda. Each director stood and offered a succinct report of his or her department’s recent activities. Lee began with the director in charge of North American equities. “Please, Mr. Ping, go ahead.”
“I’m pleased to announce that we have increased our stake in Morgan Stanley to twelve percent. This is our first significant share purchase in the company since our original investment in 2007. Clearly the moment was not ideal.”
“But Mr. Ping,” said Magnus Lee, “even the loveliest rose cannot bloom in poor soil.”
Ping beamed, publicly absolved of his poor timing. “During the last month,” he went on, “we purchased an eight percent stake in Noble Energy Group for $900 million, a seven percent stake in Boeing for $5 billion, and a four percent stake in Intel for $5 billion. To date, we hold stakes in eighty-nine U.S. corporations valued at $400 billion. Sixty-seven of them are Fortune 500 corporations. Twenty-five are Fortune 100 corporations. Marked to market, our investments show an increase of two hundred percent.”
It was CIC policy to take only minority stakes in foreign corporations and never to influence company policy. It was also CIC policy to invest in a spectrum of industries: energy, consumer products, finance, airlines, automobiles, and of course technology.
Finally, the director of North American equities stated that he had just completed negotiations to purchase a sizable stake in one of the financial service industry’s most prestigious companies, American Express.
Lee clapped, and the entire table quickly followed suit. “Impressive,” he said. “Perhaps we will all receive platinum cards.”
“Ah, but Mr. Lee, surely a vice premier deserves the Black Card.”
The table again clapped to show their support. In a country that worshipped status, the Black Card, issued only to those who spent over $100,000 a year, was the ultimate symbol of wealth.
Lee shook his head in false modesty while waving an admonishing finger. “No, no, Mr. Ping. Such a position is surely beyond my capabilities. There are many candidates far more qualified than I.”
Lee was lying, and everyone in the room knew it. Face demanded that he not appear too convinced of his election. In four days the members of the Chinese Communist Party would gather for a once-in-a-decade congress to choose the country’s next leaders. Besides the president, the party would select the ten-member Standing Committee to head up the more important ministries. It had been Lee’s fervent dream to be appointed vice premier of finance one day. Every action he had taken in the past ten years had been directed to this end. Some, like the creation of the China Investment Corporation, were known to all and formed the basis of his public record. Others were more impressive but known to only a few. The few, however, sat at the pinnacle of the government and ruled over the army, the Ministry of State Security, and of course the Ministry of Finance. It was these actions, not his stellar investment returns, that would guarantee he achieved his long-desired goal.
“And besides,” Lee went on, “where would I have enough money for such a card?”
The meeting continued. The next man discussed investments with U.S. private equity firms and hedge funds. Again the returns were impressive, as were the CIC’s investments in corporate bonds.
The CIC’s investments were not only made for financial gain. Each held strategic considerations as well. Companies who counted the CIC, the investment firm, as an important shareholder tended to support policies beneficial to China, the country. Such policies included favorable tariffs on Chinese imports; support, or at least silence, on the issue of reunification with Taiwan; and a steadying hand on the issue of revaluation of the Chinese
“I’m pleased to announce that we have increased our stake in Morgan Stanley to twelve percent. This is our first significant share purchase in the company since our original investment in 2007. Clearly the moment was not ideal.”
“But Mr. Ping,” said Magnus Lee, “even the loveliest rose cannot bloom in poor soil.”
Ping beamed, publicly absolved of his poor timing. “During the last month,” he went on, “we purchased an eight percent stake in Noble Energy Group for $900 million, a seven percent stake in Boeing for $5 billion, and a four percent stake in Intel for $5 billion. To date, we hold stakes in eighty-nine U.S. corporations valued at $400 billion. Sixty-seven of them are Fortune 500 corporations. Twenty-five are Fortune 100 corporations. Marked to market, our investments show an increase of two hundred percent.”
It was CIC policy to take only minority stakes in foreign corporations and never to influence company policy. It was also CIC policy to invest in a spectrum of industries: energy, consumer products, finance, airlines, automobiles, and of course technology.
Finally, the director of North American equities stated that he had just completed negotiations to purchase a sizable stake in one of the financial service industry’s most prestigious companies, American Express.
Lee clapped, and the entire table quickly followed suit. “Impressive,” he said. “Perhaps we will all receive platinum cards.”
“Ah, but Mr. Lee, surely a vice premier deserves the Black Card.”
The table again clapped to show their support. In a country that worshipped status, the Black Card, issued only to those who spent over $100,000 a year, was the ultimate symbol of wealth.
Lee shook his head in false modesty while waving an admonishing finger. “No, no, Mr. Ping. Such a position is surely beyond my capabilities. There are many candidates far more qualified than I.”
Lee was lying, and everyone in the room knew it. Face demanded that he not appear too convinced of his election. In four days the members of the Chinese Communist Party would gather for a once-in-a-decade congress to choose the country’s next leaders. Besides the president, the party would select the ten-member Standing Committee to head up the more important ministries. It had been Lee’s fervent dream to be appointed vice premier of finance one day. Every action he had taken in the past ten years had been directed to this end. Some, like the creation of the China Investment Corporation, were known to all and formed the basis of his public record. Others were more impressive but known to only a few. The few, however, sat at the pinnacle of the government and ruled over the army, the Ministry of State Security, and of course the Ministry of Finance. It was these actions, not his stellar investment returns, that would guarantee he achieved his long-desired goal.
“And besides,” Lee went on, “where would I have enough money for such a card?”
The meeting continued. The next man discussed investments with U.S. private equity firms and hedge funds. Again the returns were impressive, as were the CIC’s investments in corporate bonds.
The CIC’s investments were not only made for financial gain. Each held strategic considerations as well. Companies who counted the CIC, the investment firm, as an important shareholder tended to support policies beneficial to China, the country. Such policies included favorable tariffs on Chinese imports; support, or at least silence, on the issue of reunification with Taiwan; and a steadying hand on the issue of revaluation of the Chinese
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