Tags: China | sovereign | fund | agriculture

China's Latest Investment Pick: Agriculture, Food

By Dan Weil   |   Wednesday, 18 Jun 2014 09:35 PM

China Investment Corp. (CIC), China's $650 billion sovereign wealth fund, is shifting some of its allocation to agriculture.

"We believe the agriculture sector offers stability, a way of hedging against inflation and a device for spreading risk," CIC's CEO Ding Xuedong wrote in the Financial Times.

"We are keen to invest more across the entire value chain—in partnership with governments, multilateral organizations and like-minded institutional investors—in areas that will help to unlock the industry’s potential, increase the food supply and offer attractive returns."

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CIC's move reflects the goals of the country's new government, which wants the economy to center more on domestic consumption, according to the FT.

"The drought of capital afflicts the entire [agriculture] industry, from infrastructure, such as irrigation, to grain and animal protein production, to support services, such as transport, storage and processing," Ding said.

"This is a serious misallocation of funds. All these areas require investment if adequate supply is to be produced."

Apart from agriculture, CIC will devote its global investments to technology, real estate and infrastructure, the FT reports.

Meanwhile, foreign direct investment in China fell 6.7 percent in May to $8.6 billion from a year earlier, according to official Chinese data.

Foreign companies object to China's irregular legal system and rising wages, The Wall Street Journal reports. Companies also are worried about slowing economic growth in China.

Chinese GDP expanded at a 7.4 percent annual rate during the first quarter, its slowest pace in 18 months.

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