The evolution of sovereign wealth funds 

and their influence in the global economy. 

The case of China 

Ioana-Iulica MIHAI 

Constantin Brâncoveanu University of Piteşti 

Abstract. 

This paper, through the deductive analysis and the 

causal explanations, catches the positive and negative character of the 

Sovereign Wealth Funds development as a relatively new economic tool, 

but with a strong impact in the global economy, especially in the context 

of the current financial changes. The benefits brought by them to the 

global capital market, in terms of increasing liquidity and allotting 

financial resources, however cannot diminish the fears related to the 

states holding sovereign funds in the economy of other countries, and in 

order to give an example we present the case of China. 

Introduction 

In the current context in which the world economy is under a strong 
impact of the economic, monetary, technological, military and diplomatic 
changes, globalisation seems to have generated an unprecedented development 
of a relatively new economic tool called sovereign wealth funds (SWFs). They 
recorded a sustained increase of the assets’ value in the last ten years and, in the 
context of the effects of the current economic crisis, they have undergone 
spectacular dynamics, growing from $ 3.265 billion in September 2007 to $ 
5.182 billion in December 2012, a value which exceeds by far the aggregate 
capital of the hedge funds and of the private equity. During the financial crisis 
and the recession, public debts, budgetary deficits and investments are followed 
more attentively at world level (Pociovălişteanu, 2011, p. 1018). 
To assess the impact of the SWFs on the capital market, not only the 
value of their assets is important, but also the way of making investment 
decisions. The decision to invest requires a careful analysis of the field to which 
the investment is directed, and the decision to invest is subject to a number of 
factors (Ioneci, Mîndreci, 2010, p. 199). The general feature of the investment 
funds is that they operate according to the business principles to the benefit of 
the holding country. 
China is the country that has become increasingly important in the global 
economy, benefiting greatly from globalisation, through the use of foreign 
capital to improve economic efficiency, to encourage competition and to gain 
access to the state-of-the-art technology. China is currently the world’s second 
largest economy in the world, the world’s leading exporter and producer, 
surpassing, in turn, established countries in the world hierarchy, such as the 
USA, Japan and Germany. 
China’s sovereign wealth funds amount to approximately 29% of the total 
assets of all SWFs in the world, positioning itself on the first place in the world 
in this regard, with a significant lead over the second place, the United Arab 
Emirates (16%) 

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This BLOG  looks at pensions and their impact on what are called Public Private Partnerships or P3’s these are not really about private funding at all but about two streams of public funding, pensions and government with private capital a third partner.
We will also deal with other pension matters, such as Defined Contribution Plans (DC) vs Defined Benefit (DB) PLANS, the weakness in private plans, the need for pension reform in public pensions to have shareholder rights, directorships and ethical investment directives and policies. 
Finally taking the long view we will show how these funds are forms of evolving social capital that is dominating private capital as we evolve into socialization of capital. 
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