Ding Xuedong: Half A Trillion Dollar Man

Ding Xuedong is little known outside Chinese political circles but considered a rising star within them. The same could have been said of Lou Jiwei, his predecessor as head of China’s $480 billion sovereign wealth fund, China Investment Corp. (CIC), when he took on the job.

Lou moved up to finance minister in March. The three-month gap in filling the last of the “big” finance vacancies in Beijing as a result of the leadership transition, has spawned rumors that the appointment had become another sparing ground between economic reformers and the Party old guard. But it is also the case that several prospective candidates turned the position down, fearing that inheriting Lou’s investment portfolio might turn out to be a poisoned chalice.

The 53 year old Ding, who is expected to be formally named to the job shortly, is currently a senior State Council official. There, he has worked with new prime minister Li Keqiang. Before that, he was a vice minister at the finance ministry, where he has spent most of his career, much of it concerned with agricultural finance. Not the most obvious background for someone who will have half a trillion dollars of assets to manage in international capital markets. But then Lou didn’t have that either when he launched CIC in 2007.

The question occupying asset managers, now they have a name, will be the extent to which Ding may reorient CIC, the world’s fifth-largest sovereign wealth fund, away from the natural-resource and energy investments favored by Lou (and central government) and towards alternative assets and direct investment in developed economies — at a time when attitudes in America and Europe against such state-backed investment are hardening.

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