This content is from: Corner Office

Despite Trump, CIC Sees Opportunity in U.S. Infrastructure

China Investment Corp. Chairman Ding Xuedong looks past possible frictions to investment opportunities.

  • Allen T. Cheng

U.S. President-elect Donald Trump may be hawkish when it comes to talking about China, but the head of the nation’s $814 billion sovereign wealth fund does not appear concerned. In fact, chair Ding Xuedong of China Investment Corp. has remarked that he is eyeing more investment opportunities under the new Trump administration.

“China and the U.S. should improve economic inclusion to cooperate more with each other, develop new technology, enhance connectivity, and increase investment in infrastructure construction,” Ding said at a recent financial forum in Hong Kong, adding that he is looking to invest in U.S. private equity, hedge funds, high technology, and infrastructure.

“China’s foreign policy has become very pragmatic: Do not interfere in the politics of another country, and do not try to influence domestic political outcomes. Deal with whoever comes to power. Business first, politics second,” notes Beijing-based American lawyer, entrepreneur, and author Laurence Brahm. “They will adopt this unemotional policy with Trump.”

CIC’s Ding estimates that the U.S. will need at least $8 trillion for rebuilding its infrastructure, far more than the U.S. public or private sector can possibly provide. “They will have to rely on outside investors, which gives us a lot of direct investment opportunities in the country,” Ding said at the Asian Financial Forum, held January 16 and 17.

China is likely to seek “quick and easy ways to curry favor” with the Trump administration, suggests Andrew Collier, a Hong Kong–based analyst who from 2009 to 2011 was president of Bank of China International in the U.S. “Investments by one of its policy banks in favored areas, such as infrastructure, may be welcomed,” as long as investments bring jobs and are not too high-profile in terms of location, brand names, or sensitive areas such as technology. “This may be a good way for China to soften its relations with the U.S. in the near term,” he says. “Down the road things may get more heated on the trade and security front.”

A major infrastructure upgrade in America is imperative for America to even begin to think about becoming competitive again, observes Brahm, who has written a number of books on China, including China’s Century in 2001, and has advised the Chinese government. “Infrastructure overhaul has been neglected by the past three presidential administrations,” he says. “So Trump’s call for infrastructure upgrades is necessary. But he does not have the finances to do it.”

Whether Americans realize it or not, infrastructure in the U.S. lags behind China’s, says Brahm, who regularly travels between New York, Hawaii, and his office in Beijing. America lacks the “smart urban infrastructure technology that China has aggressively developed over the past decade for its own needs,” he notes, adding that even the infrastructure plans Trump has discussed “are already antiquated by China standards, even before construction begins.”

After investing more than 20 percent of its gross domestic product in infrastructure annually for more than 20 years, China has among the most sophisticated transportation networks in the world and is currently investing $503 billion to build a national bullet train system that’s 18,650 miles in length, nine times bigger than Japan’s Shinkansen network, and running 186 to 217 miles per hour. Engineers are testing trains that can top 500 miles per hour.