Let’s be very clear about one thing. CIC is and for the forseeable future will be political in the sense that is will be managed in a way that serves to advance Chinese national interests as defined by the Communist Party of China, and that means that CIC will be used as a tool to increase China’s global political and economic interests. This is just a reality. The United States may not like it, but it has to react to this since there isn’t any chance that the US can change this.
What makes this an interesting project is that China is clearly acting in a way so that large segments of the United States benefit from rising Chinese economic and political power (Walmart for example), and can be expected to support it. This is very different from the behavior of Russia or even Japan. China doesn’t want its rise to be zero-sum, and this isn’t out of altruism rather than self-interest. If there is a national consensus within the United States that China’s rise must be stopped then this makes it much more difficult for China to get more political and economic power.
The question that Beijing in interested in becomes *how* can CIC best advance Chinese national interests, and there different people have different ideas. What makes this a difficult question is that some of the obvious ways of using CIC to advance Chinese interests won’t work. I’m not too thrilled about using CIC to establish control over strategic resources and very much opposed to CIC given below-market financing to SOE’s, because based on looking at people doing similar things in the past, my belief is that those activities do not aid in adding to Chinese comprehensive national power, and will end up being a drain on Chinese wealth and power. But I have an open mind about this.
In particular, my personal belief is that to meet its political goals, CIC must remain commercial in the sense of adding wealth to the national treasury rather than subtracting from it, and that things such as promotions and funding decisions be made such that CIC makes a profit, and that people be rewarded when CIC generates wealth and punished when it doesn’t. This doesn’t create large contradictions with the political goals of CIC, since there are lots of different ways of making money. If it is choice between making money with strategic resources and making money with something else, then sure, it’s alright to discuss which industry is going to help China. The commercial constraints come in when its a choice between losing money and making money.
The reason commercial constraints are important is because you end up with lots of principal-agent problems, and you don’t want to end up with a situation were CIC benefits its funded corporations and managers, but hurts the national interest. If you impose a “make money for us or we will fire you all” condition, then it makes it harder for the people running CIC to loot the company, whereas if you merely use vague concepts like “national interest” without controls, then the managers of CIC will act as if “national interest” means moving all of CIC’s money into their personal bank accounts and leaving the government with massive debts.
So in this sense, not only are “political” and “commercial” not in conflict, but the requirement that CIC make money and the desire for the Communist Party to exercise control are not in conflict, since the requirement that CIC make a profit provides a means by which the Communist Party can exercise control over the management of CIC and align the interests of the management with the interests of the Chinese political leadership. The policy here is “if we get money and power, you get money and power.”
The reason business and economics is vitally important is that the Chinese strategy for getting money and power requires that the game be non-zero sum. If more money and power for me means less money and power for you, then we can’t rationally cooperate, but if money and power are generated (which is the goal of business), then we can work in ways that help both of us.
Having two groups of people stare each other in the eye and figure out how they can based interact in a way that benefits them both is almost the definition of commercial.