China’s State Council has apparently given the green light to a new state-owned asset manager called Guoxin Asset Management (GAM) (…we had previously been calling this entity “CIC 2.0”…). The new firm is domestically focused and owned by SASAC. According to the China Daily:
“…the new entity will be a domestically oriented sovereign wealth fund set up by SASAC to better manage State-owned assets in the industrial sector, similar to the role of CIC that manages part of the country’s foreign exchange reserve in the financial sector.”
GAM will thus join Chengtong and the State Development Investment Corp as SASAC owned investment managers. GAM will facilitate the restructuring of SOEs by consolidating and reorganizing them; the hope is that it will turn small and unprofitable SOEs into viable and profitable enterprises. Through this process, the expectation is that the number of SOEs will drop from 128 to around 80. As such, this new “SWF” will largely resemble the Temasek of old (i.e. circa 1970s) in that it will be inheriting some unprofitable companies and have to untangle some pretty messy conglomerate structures.
Unlike CIC and SAFE, those outside of China are unlikely to hear much about GAM, according to Michael McCormack. Indeed, the new entity should have no budget for international investments at all nor any mandate to make them; it is almost 100% domestically-oriented. If you haven’t heard of Chengtong to date, you won’t be hearing much about GAM in the future.