Canada Pension Manager Pauses China Deals
Canada Pension Plan Investment Board (CPPIB), one of the world’s largest pension funds, has announced that it will pause new investments in China. The 158 billion dollar pension manager is taking a step back from the country due to increasing geopolitical tensions between Canada and China.
Background of CPPIB
CPPIB is a professional investment management organization that invests the funds of the Canada Pension Plan (CPP) on behalf of 20 million Canadian contributors and beneficiaries. It is one of the world’s largest pension funds, with assets under management of $158 billion as of March 31, 2023.
Canada-China Relations
Relations between Canada and China have been strained since the arrest of Huawei executive Meng Wanzhou in December 2018. Since then, China has detained two Canadians, Michael Kovrig and Michael Spavor, on charges of espionage. In response, Canada has imposed sanctions on Chinese officials and suspended its extradition treaty with Hong Kong.
CPPIB’s Decision to Pause China Deals
In light of the deteriorating relations between the two countries, CPPIB has decided to pause new investments in China. The pension fund has also decided to review its existing investments in the country.
CPPIB’s Chief Executive Officer Mark Machin said in a statement, “Given the current geopolitical environment, we believe it is prudent to pause new investments in China and review our existing investments.”
CPPIB’s Investment in China
CPPIB has invested more than $7 billion in China since 2009. The pension fund has invested in a variety of sectors, including technology, real estate, and infrastructure.
In 2020, CPPIB invested $1.2 billion in a joint venture with China’s Ping An Insurance Group. The joint venture was formed to invest in technology companies in China.
Reaction to CPPIB’s Decision
The decision by CPPIB to pause new investments in China has been met with mixed reactions. Some analysts have praised the move, saying that it is a prudent decision given the current geopolitical environment.
However, other analysts have criticized the decision, saying that it could hurt CPPIB’s long-term returns. China is one of the world’s fastest-growing economies, and CPPIB could miss out on potential investment opportunities if it continues to pause new investments in the country.
CPPIB’s Future Plans
CPPIB has said that it will continue to monitor the situation in China and review its existing investments in the country. The pension fund has also said that it will continue to invest in other markets, such as the United States and Europe.
CPPIB’s Chief Executive Officer Mark Machin said, “We remain committed to our long-term investment strategy and will continue to invest in markets around the world, including the U.S. and Europe.”
Conclusion
Canada Pension Plan Investment Board (CPPIB) has announced that it will pause new investments in China due to increasing geopolitical tensions between Canada and China. The decision has been met with mixed reactions, with some analysts praising the move and others criticizing it. CPPIB has said that it will continue to monitor the situation in China and review its existing investments in the country, while also investing in other markets such as the United States and Europe.