It is clearly quite difficult for Beijing-based reporters to uncover CIC scoops that are ‘fit to print’. And the reason for this (as I’ve been told by journalists on the ground) is the serious dearth of reliable CIC sources. (Cue smiling CIC management team.) Basically, people in ‘the know’ know better than to talk to reporters. So, while there are variety of ‘unnamed sources’ that have been the inspiration for a plethora of articles, it seems to me that these individuals’ trustworthiness is doubtful.
For example, in April, citing three unnamed sources, the FT reported that the CIC would in fact receive another $100-200 billion in capital. Confirmation from three unnamed sources? That should be enough for the CIC to secure a bank loan for an early start on its investment activities. Right? Wrong. As has often been the case over the past few years, a new set of unnamed sources arrives to completely undermine the previous set of unnamed sources.
Yesterday, two unnamed Ministry of Finance sources revealed that the Chinese government has decided against another large capital injection for the CIC. Instead, the government will provide the Chinese SWF with tens of billions in funding each year. The idea, apparently, is to establish a long-term mechanism for future injections into the CIC. This annual injection funding model, which we are told has already been submitted to the Budgetary Affairs Commission (in the NPC) for approval, will (hopefully) eliminate the kind of funding uncertainty that has plagued the SWF for the past year. But, as I opined above, this may or may not be the truth.
There’s a bit of an Aesop Fable in all of this. The more these unnamed sources “cry wolf”, the more I want to simply ignore the CIC’s entire funding saga. Two years ago, I would have spent hours researching and thinking about this “annual funding model”. Today, I simply don’t believe it. I’ve been writing about “imminent capital injections” since 2009 (literally), and I’ve been worn thin. The only credible thing I’ve read lately on the CIC funding saga came from Jin Liqun,
“We will eventually work out a mechanism through which we will have continued funding.”
That much I do believe. Now if only there were some consistently reliable unnamed sources on the CIC.