Record fund will ex­pand to 100b yuan

China Daily (USA) - - FRONT PAGE - By CHEN MENGWEI in Bei­jing chen­meng­wei@chi­

China es­tab­lished a record­break­ing fund on Mon­day to sup­port projects to lift mil­lions of peo­ple out of poverty.

The in­vest­ment fund has been set up with an ini­tial 12.2 bil­lion yuan ($1.81 bil­lion) in cap­i­tal from 51 state-owned en­ter­prises, in­clud­ing the State De­vel­op­ment and In­vest­ment Corp and the State Grid.

That sum will even­tu­ally grow to as much as 100 bil­lion yuan, ac­cord­ing to a state­ment from the State Coun­cil’s State-owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion.

The fund was launched to co­in­cide with the na­tion’s third Poverty Al­le­vi­a­tion Day on Mon­day.

Un­like most poverty al­le­vi­a­tion funds man­aged by the gov­ern­ment, the new fund will be run by an in­vest­ment com­pany to make sure it is sus­tain­able and prof­itable, said Wang Huisheng, the chair­man of SDIC, the gov­ern­ment hold­ing com­pany that owns the in­vest­ment com­pany.

Projects that can cre­ate more jobs and bring more peo­ple out of poverty will be fa­vored, with pri­or­ity given to poor prov­inces, bor­der ar­eas and re­gions with large pop­u­la­tions of eth­nic groups.

Liu Yun, vice-pres­i­dent of SDIC Chuangyi In­dus­try Fund Man­age­ment, which will over­see the fund, said the bot­tom line is to “break even and seek a mea­ger profit”.

“Our big­gest dif­fer­ence com­pared with most other fund man­agers is that we don’t just go for the big­gest prof­its,” Liu said. “Our ma­jor con­cern is to bal­ance po­lit­i­cal im­pact and eco­nomic re­turn. We have to make sure most of the projects we in­vest in are prof­itable. But we’ll also tol­er­ate some losses when the poverty re­lief ef­fect is sig­nif­i­cant.”

To keep pace with China’s na­tional strat­egy to erad­i­cate “ex­treme poverty” by 2020 — that is, to en­sure ev­ery Chi­nese earns more than 4,000 yuan a year — the State-owned as­sets com­mis­sion has re­quired that the ini­tial 12 bil­lion yuan is in­vested by 2018, ac­cord­ing to an in­ter­nal re­port ac­quired by China Daily.

In June 2014, theMin­istry of Finance, SDIC and China Tobacco es­tab­lished a poverty al­le­vi­a­tion fund of 2.8 bil­lion yuan, the first of its kind in China. Liu, whose com­pany also runs that fund, said the in­vest­ment strat­egy will “be al­most the same”, with the aim to max­i­mize the busi­ness im­pact.

The first deals have been signed with lo­cal gov­ern­ments and com­pa­nies in He­bei, He­nan, Jiangxi, Guizhou, Yun­nan and Qing­hai prov­inces, ac­cord­ing to a Mon­day news re­lease. De­tails have not been dis­closed.

Liu Yongfu, di­rec­tor of the State Coun­cilLead­ing Group of Poverty Al­le­vi­a­tion and De­vel­op­ment, warned that the fund should be care­fully su­per­vised to make sure the money is chan­neled into the right places.

“Not ev­ery in­vest­ment can qual­ify as tar­geted poverty al­le­vi­a­tion,” he said. “Tar­get- ed poverty al­le­vi­a­tion is not giv­ing things and money away. That’s why we set up the fund. It should not only go with the pol­icy, but also go by mar­ket rules.”

This year, China has al­lo­cated more than 100 bil­lion yuan of gov­ern­ment-con­trolled funds, a record amount, to help lift more peo­ple out of poverty, ac­cord­ing to Su Guoxia, a spokes­woman for the lead­ing group on poverty al­le­vi­a­tion.

Fund­ing from the cen­tral bud­get was in­creased to 66.7 bil­lion yuan, up by 43.4 per­cent on last year, while pro­vin­cial bud­gets ex­ceeded a to­tal of 40 bil­lion yuan, an in­crease of­morethan 50 per­cent.

On Mon­day, China’s State Coun­cil In­for­ma­tion Of­fice is­sued a white pa­per on China’s progress in poverty re­duc­tion and hu­man rights.

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