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America’s largest public pension fund has tapped a manager of China’s predatory investment fund as its next chief investment officer.
The California Public Employees’ Retirement System, which manages $360 billion and is frequently described as the most influential pension fund investor in the U.S., has asked Ben Meng to take over the top investment job when its current chief departs at the end of the year, the Wall Street Journal reported Wednesday.
Wall - Street - Journal - Report - Meng
In the Wall Street Journal’s report, Meng is described as an official of the State Administration of Foreign Exchange, China’s foreign-exchange and currency regulator. His job, however, is not writing regulations or supervising Chinese companies’ foreign exchange reporting.
Meng, a former Wall Street bond trader, is a deputy chief investment officer of SAFE. This suggests his job was to invest the assets of SAFE, which is not just a regulator but also one of the world’s biggest sovereign wealth funds. SAFE manages over $3 trillion of China’s foreign reserves.
China - SAFE
What is China’s SAFE?
China is a closed economy, which means foreign currency flows are tightly controlled. When a Chinese company receives dollars by exporting goods to the United States, it is required to exchange them for China’s domestic currency. The local bank making the exchange turns the dollars over to the People’s Bank of China, the equivalent of China’s Federal Reserve.
PBOC - Dollars - SAFE - Funds - China
The PBOC then turns the dollars over to SAFE, which is charged with investing the funds to further China’s strategic and economic goals. In the past, this mainly involved buying ultra-safe U.S. assets such as Treasuries and bonds backed by U.S. government-sponsored entities. But in recent times China’s investment strategy shifted to investing in technology and supporting China’s One Belt One Road schemes.
An investigation by the U.S. government into China’s actions with respect to U.S. technology found that Chinese investment strategy is significantly...
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