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OECD Forum 2010: Financing future growth

27 May 2010
by Brian Keeley

Europeans will need to work a bit harder if they want their economies to attract overseas investment. That’s the message from Gao Xiqing, President and CIO of the China Investment Corporation (CIC), the Chinese sovereign wealth fund that searches the world for investment opportunities.

Mr. Gao is one of the panellists on a session at the OECD Forum entitled, “Financing Future Growth”, which has covered a wide range of themes and topics this afternoon. The activities of sovereign wealth funds are a big talking point. Mr. Gao has spoken frankly about the suspicions such funds sometimes encounter.

“We never seek to control any industry,” Mr. Gao says, “but we often find governments in Europe saying you better not invest in our institutions because we fear you.” He’s been describing his fund’s reluctance to take an active role in companies in which it invests, saying it rarely tries to intervene and never seeks to take control of an industry.

Perhaps ironically, Mr. Gao has also been criticising European’s attitudes to capitalism. “A hundred and sixty years ago, Marx said a phantom of communism is hanging around Europe – that’s still the case. We do meet governments saying we don’t like capitalism.” According to Mr. Gao, Europe can’t expect to grow if it has people working 20-hour weeks. As for his fund’s investment in Europe, he says it will have to look very carefully at whether politicians in Europe are prepared to pursue policies that will allow the continent to grow as it did in the past. 

But his stance hasn’t gone without criticism. John Monks, General Secretary of the European Trade Union Confederation, says there is a lot of concern in the European labour movement about human rights and democracy. “You are government bodies, and you reflect the policies of your government,” he has said to Mr. Gao. “If  we don’t agree with you, don’t expect us to be uncritical.”

Keeping the focus on emerging and developing countries, Carolyn Ervin, Director of the OECD’s Financial and Enterprise Affairs department, has been highlighting the role for private investment in driving development. Pension funds hold more than $20 trillion in assets, representing a huge reservoir of potential investment funding. But, she says, even at the local level, private firms can be crucial partners for investment in areas like infrastructure. 

With a banker on the panel – Franco Bassanini, chairman of Italy’s Cassa Depositi e Prestiti – it was probably inevitable that the panel would produce at least a hint of “banker bashing”. He’s acknowledged that some of the criticism of bankers is “not unfair”, but says regulators must also share the blame. Asked by moderator Larry Elliott, Economics Editor of The Guardian newspaper, what he’d like to see changing over the next 12 months, he says he’d like to see banks becoming so good that they were “regarded not as part of the problem, but part of the solution”.

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