China Investment An Open Book?

60 Minutes: Sovereign-Wealth Fund's President Promises Transparency

Over the winter, as Wall Street was losing tens of billions of dollars due to the mortgage and credit crises, it wasn't the Fed or Congress that came to the rescue. It was something called sovereign-wealth funds - pools of money controlled by foreign governments.

Desperate for cash, some of Wall Street's ailing mega-banks, like Citigroup, reached out to these funds. So, for instance, Abu Dhabi bought $7.5 billion worth of shares in Citigroup.

Altogether the sovereign-wealth funds of countries like Abu Dhabi and Kuwait have spent over $30 billion bailing out our financial system.

Which has raised troubling questions: are these mostly undemocratic regimes saving Wall Street or invading it? As correspondent Lesley Stahl found out, one fund is of special concern. It's new, highly secretive, and the fifth largest in the world.

At the Beijing headquarters of the China Investment Corporation, 180 employees are looking for companies to invest in in the West.

"How much do you have to invest?" Stahl asked the fund's president, Gao Xiqing.

"$200 billion," Gao replied.

Last year Gao decided to pour some of those billions into investment houses on Wall Street.

"Was there any thinking in China, given the sub-prime crisis in the United States, that China would come to the rescue?" Stahl asked.

"Some people will try to put it that way. But, you know, at least it's not my thinking," Gao said.

"Now, some people consider what you're doing, as a huge threat," Stahl said. "Your real intention is to 'gobble us up,' you know. They see you as vultures, really. I mean, I've seen that word."

"Or some people say locust," Gao said.


"The Europeans call it locusts," Gao said. "The Americans call it vultures."

But vultures we are not, Gao says. We're like a typical investor: our only aim is to make money. Gao bridles at the mistrust.

"Immediately after we announced our existence, then the U.S. Government, some European governments, all came out and said, 'okay, we think of this as - this is a dangerous - we need to do something about it. They probably want to control us. They probably want to do something bad about us,'" Gao said.

The reason Gao agreed to this interview - his first as fund president - is because he wants to dispel any fears that China intends to gobble up U.S. companies.

"It's our policy not to control anything," Gao said.

"So you'll put a lot of money in a foreign company, and not even get on the board?" Stahl asked.

"You're right."


"Simply because we don't want to go in and say, 'OK, I think you should change this person or I think you should change this product line,'" Gao said. "That's not our business."

"Mr. Gao, you know that's very reasonable, but I know that there are people in the United States who would listen to that and become very suspicious," Stahl Said. "They would say it's just a tactic. That's what they're saying now, so our guard will go down and eventually they're going to come in and force these companies to make decisions that will help China politically."

"That's typically the thinking of people who do not understand the actual functioning of the capital market," Gao said.