June 17, 2011 / 9:38 AM / 6 years ago

UPDATE 1-China sovereign wealth fund to name new CIO-source

(Adds details)

* Vice chairman of pension fund tipped for position

* Intense jockeying ahead of 18th Party Congress

* CIC president in line for chairman’s post

By Victoria Bi and Benjamin Kang Lim

HONG KONG/BEIJING, June 17 (Reuters) - A top executive of China’s national pension fund is tipped to become chief investment officer of the country’s $300 billion sovereign wealth fund, a source said on Friday, part of intense political jockeying ahead of a sweeping reshuffle of the Communist Party’s top leadership.

Li Keping, 55 , vice chairman of the $130 billion National Social Security Fund, is likely to succeed Gao Xiqing as chief investment officer of China Investment Corp (CIC) , the source at CIC told Reuters, requesting anonymity.

Gao, 57, a Duke University-trained lawyer, will remain president of CIC for now, the source added.

A second source with knowledge of the planned personnel change said Li is expected to eventually become president.

Gao is the front-runner to succeed Lou Jiwei as CIC chairman, the source said, also speaking on condition of anonymity.

The timing of the personnel changes is not known, but it is likely to happen ahead of the Communist Party’s 18th Congress in autumn 2012.

It was unclear if Lou, a former vice finance minister who is a keen golfer, would be promoted to another job.

Lou, who holds a rank equivalent to a cabinet minister, is 60 and can serve another five-year term before reaching retirement age.

A CIC spokesperson, reached by telephone, declined immediate comment.

In a rare media interview published in May, Lou said CIC has applied for additional funding, but there was no timetable.

“The larger the fund size, the harder it is to manage and the greater the pressure on us,” Lou told the Capital Week magazine. “Double-digit returns on investment is not easy.”

Lou said CIC’s overall investment return in 2010 was on par with 11.7 percent achieved in 2009.

CIC has found itself under the spotlight and under fire for money lost on high-profile investments in Wall Street investment bank Morgan Stanley and private equity firm Blackstone Group.

More recently, CIC has come under public pressure for buying shares of Tokyo Electric Power Co , which operates the crisis-stricken Fukushima Daichi nuclear power plant. In March CIC spokesman Wang Jianxi denied media reports that the company had invested 35.9 billion yen ($445 million) in the company.

He also dismissed media reports that CIC had invested 522.2 billion yen in 10 major Japanese companies.

Actual investment in Tokyo Electric and the 10 major Japanese firms were “much smaller” than the reported figures, Wang said.

Echo Hu, an analyst at Z-Ben Advisors in Shanghai, was upbeat about CIC.

“CIC has increasingly become mature in its investment procedures...CIC has a short track record, but its performance in the past two years hasn’t been bad,” Hu said.

The Financial Times reported earlier this year that CIC would get up to $200 billion in new funding from the government, which is seeking to reduce China’s exposure to U.S. government debt.

A source with ties to the leadership said the State Council, or cabinet, is studying a proposal to split CIC from its wholly owned subsidiary, Central Huijin Investment Ltd, as part of a restructuring to boost accountability.

CIC was set up with the aim of seeking higher returns from riskier investments for part of the country’s stockpile of foreign exchange, which has swelled to $3.05 trillion, the largest in the world.

$1 = 80.615 Japanese yen Additional reporting by Zhou Xin and Kang Xize; Editing by Jacqueline Wong

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