China's CIC defends transparency, eyes modest returns

By Michael Flaherty and Dominic Whiting

HONG KONG (Reuters) - An executive at China Investment Corp, the country's $200 billion sovereign wealth fund, defended its steps toward transparency and said the fund only targets a modest, single-digit investment return.

The comments of Jesse Wang, CIC's executive vice president and chief risk officer, on Wednesday came as politicians call for better disclosure from sovereign funds, which have taken multi-billion dollar stakes in several Western financial firms.

Wang said the fund, whose investments in Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and private equity house Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz) have both fallen sharply since CIC bought, compared itself to a pension fund or endowment and set modest goals for returns.

"We think we're quite conservative at this time. I think it's about mid-one-digit, or slightly above one digit," Wang told a Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) fund manager conference in Hong Kong.

Wang outlined CIC's internal structure, aware of both heat the fund is taking from within China over its performance, and the backlash it and other sovereign funds face from the likes of Washington D.C. and other capitals concerned about investments by foreign governments.

"CIC is one of the most transparent sovereign funds in the world," he said.

But Wang was candid that the CIC is inexperienced and learning from mistakes. He said reporters often ask him if CIC will continue to invest in the United States, a region still getting battered by the credit crunch.

"It is an opportunity," he said during the speech. "But the opportunity is for people who are ready."