September 2010

China’s ruling executive body, the State Council, established the China Investment Corporation (CIC), a sovereign wealth fund, in September 2007 to invest $200 billion of China’s then $1.4 trillion in foreign exchange reserves. As with other sovereign wealth funds worldwide, the CIC’s existence allows China to invest its reserves in a wide range of assets, including stocks, bonds, and hedge funds. Congress and financial analysts raised concerns about the CIC after its creation, partly because it was a comparatively large sovereign wealth fund, partly because it was government-owned, and partly because it reported directly to the State Council. Some observers were apprehensive that the Chinese government would use the CIC to acquire control over strategically important natural resources, obtain access to sensitive technology, and/or disrupt international financial markets. The CIC attempted to counter these concerns by announcing that its investment strategy would conform to international standards, and sought only to maximize its “risk-adjusted financial return.” This report provides an overview of the CIC and its investment activities.

The People’s Republic of China (P.R.C.) is using various components of public diplomacy to influence the media in Latin America, Africa, and Southeast Asia. China’s primary purposes appear to be to present China as a reliable friend and partner, as well as to make sure that China’s image in the developing world is positive. As part of its efforts to do this, the Chinese government seeks to fundamentally reshape much of the world’s media in its own image, away from a watchdog stance toward the government to one where the government’s interests are the paramount concern in deciding what to disseminate. The Chinese efforts often result in helping authoritarian governments expand control of their local media, while working to undermine the Western model of a free and independent media.