Does China have a sovereign wealth fund?
China is home to one of the world's largest sovereign funds, China Investment Corporation. CIC's total assets under management reached about $1.24 trillion at the end of 2022, bigger than Saudi Arabia's 2022 GDP (about $1.1 trillion). Saudi Arabia was the 17th largest economy in the world in 2022.
China's $1.24 trillion sovereign wealth fund vowed to help with risk mitigation and market stabilization in 2024, the latest sign of state companies playing a bigger role in bolstering the nation's ailing stock market.
Norway's sovereign wealth fund, the world's largest, was established in the 1990s to invest the surplus revenues of the country's oil and gas sector. To date, the fund has put money in more than 8,500 companies in 70 countries around the world.
OSLO, Jan 30 (Reuters) - Norway's $1.6 trillion sovereign wealth fund, the world's largest, reported on Tuesday a record profit of 2.22 trillion crowns ($213 billion) in 2023, driven by strong returns on its investments in technology stocks.
Sovereign wealth funds represent a large and growing portion of the global economy. These funds can be found in the U.S., China, Norway, Saudi Arabia, the United Arab Emirates, Russia, and many other countries.
At the end of 2021, of the 98 countries for whom data was available, Pakistan ($27.4 billion of external debt to China), Angola (22.0 billion), Ethiopia (7.4 billion), Kenya (7.4 billion) and Sri Lanka (7.2 billion) held the biggest debts to China.
China is one of the United States's largest creditors, owning about $859.4 billion in U.S. debt. 1 However, it does not own the most U.S. debt of any foreign country. Nations borrowing from each other may be as old as the concept of money.
Some countries may have more than one SWF. Also, while the United States does not have a federal sovereign wealth fund, several of its states have their own SWFs. The list does not include pension funds that do not meet the SWF criteria.
Sovereign wealth funds are not a recent invention – Kuwait created the first modern one in 1953. Nor are they un-American: the state governments of Alaska and Texas both have sovereign funds designed to manage the revenues that have arisen from their energy booms.
While the U.S. as a whole does not have a sovereign wealth fund, several of its states do. These funds, however, are nowhere near as big as the international ones listed above. The largest in the U.S. is the Alaska Permanent Fund Corporation, established in the early 1980s, which has roughly $67 billion in assets.
Why is Norway's sovereign wealth fund so big?
Created in the 1990s to manage Norway's oil and gas revenues abroad, the fund is the world's biggest single owner of equities. Its returns are highly dependent on market movements.
Canada has several existing provincial and territorial sovereign wealth funds that invest resource wealth on behalf of citizens: the Quebec Generations Fund, the Alberta Heritage Savings Fund, the Newfoundland & Labrador Future Fund, and the Northwest Territories Heritage Fund.
Britain did not opt for such a scheme when its North Sea oil boom began in the 1970s. Instead, successive governments used the proceeds from oil and gas fields to keep public borrowing down rather than to build a fighting fund to tackle long-term problems such as our ageing population.
The USA is quite unique in the world. And in a very real way, it is not a Sovereign Entity, except in matters of Treaty and Defense. So, that's why. The Federal government hold no wealth beyond the Federal Reserve.
Governments possess sovereignty. The United States has sovereignty, each state has sovereignty, and Indian tribes have sovereignty. The sovereignty of the United States comes from each state. The original 13 colonies each had their own sovereignty over their land and people after the American Revolution.
The Kuwait Investment Authority (KIA) is the oldest sovereign wealth fund in the world. KIA traces its roots to the Kuwait Investment Board, which was established in 1953, eight years before Kuwait's independence in 1961 In 1982, KIA was created by Law No.
Debt as a share of GDP has risen to about the same level as in the United States, while in dollar terms China's total debt ($47.5 trillion) is still markedly below that of the United States (close to $70 trillion). As for non-financial corporate debt, China's 28 percent share is the largest in the world.
| Country | Economy |
|---|---|
| United States | $25.347 trillion |
| China | $19.91 trillion |
| Japan | $5.396 trillion |
| Germany | $4.55 trillion |
Measured at market exchange rates, China's GDP was $18.3 trillion in 2022, 73 percent of the GDP of the United States and 10 times more than the 7 percent of US GDP it registered in 1990.
China invests heavily in U.S. Treasury bonds to keep its export prices lower. China focuses on export-led growth to help generate jobs. To keep its export prices low, China must keep the renminbi low compared to the U.S. dollar.
Does U.S. borrow money from China?
The total debt is nearly $34 trillion, but changes somewhat depending on how you calculate it. And about a third, or 30%, of the publicly held national debt is owned by foreign countries and foreign investors. The biggest foreign holder of U.S. debt is Japan, followed by China.
As speculators seek profits by selling the yuan to buy other currencies, an increase in carry trade could further weaken the Chinese currency. Many analysts expect that if such speculative trading increases, Chinese authorities will have no choice but to step in to bolster the yuan -- possibly by unloading Treasurys.
Germany's little-known sovereign wealth fund is about to become a lot bolder in its investments than its much larger Norwegian counterpart. Kenfo, as the 24 billion-euro ($27 billion) fund is known, will start investing around 30% of its money in unlisted assets after mainly buying stocks and bonds in the past.
A sovereign wealth fund is owned by the general government, which includes both central government and sub-national governments.
SWFs generally enjoy favorable tax treatment in the U.S., but this treatment is subject to specific limitations; SWFs typically require separate LPA provisions or side-letter protection to ensure that their favorable tax treatment is not thwarted by the activities of the funds in which they invest. US Tax Exemption.
