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The WSJ's Latour, Browne, Tejada and Wei interview Lou Jiwei, chief executive of the China Investment Corporation (CIC), China's sovereign wealth fund. He says it is too early to talk about eurobonds as the financial arrangements necessary have still to be put in place. CIC is reducing its exposure to Europe. CIC is interested in infrastructure investments and sees infrastructure investment as the way out of the economic crisis for the U.S. and Europe. He has the most confidence in investing in China. Other locations are in emerging markets Brazil, S. Africa, Latin America. CIC's target is to have 50% of the assets in long term investments in infrastructure investments, commodities, real estate and direct investment and private equity, etc. and the other half in public securities. But this will pose challenges and CIC has not reached this level. It is learning from ATP, the Danish pension fund, Calpers, TRS, and CPP, the Canada pension fund. The portfolio is mark to market which creates pressures to reduce short term volatilities....

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As its economy slows and facing high debt levels, China benefits by an estimated $18 billion a month from lower oil prices in 2015. The estimate is from Starfort Holdings, investment and private equity group. The estimates as China benefits from lower prices of all commodities, including oil, are of about $250 billion annually as China replenishes its stocks of commodities. With $12 million barrels imported daily China is a major emerging market beneficiary, along with India, of the drop in oil prices. Continuing pressure on prices from the expected resilience in shale oil production in the U.S. with learning and the development of new production methods means the benefits are likely to continue. China has also not renegotiated price points in deals made earlier at higher prices with China and Venezuela, as it pursues its foreign interests. Stockpiling of grains and edible oils are being increased by 33% in 2015 by $24.7 billion.

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The U.S. Federal Reserve Open Market Committee's minutes for its April 26-27 meeting show prolonged discussion on an exit strategy from a loose monetary policy. The first step would be to make a significant reduction in the $2.4 trillion portfolio of mortgage and Treasury securities. Fed chairman Bernanke has pointed out that the Fed will first make a decision to reduce its mortgage portfolio by letting the securities to mature without reinvesting in Treasurys as it has done so far. This would be followed by reducing its holdings of long term Treasury bonds in the same manner. These steps would precede raising short term rates followed by the sale of agency securities. The minutes reveal the Fed's thinking and strategy. For instance, the minutes show "a majority of participants preferred that sales of agency securities come after the first increase in the Fed's target for short term interest rates." The minutes also show that "many of those participants also expressed a preference that sales proceed relatively gradually," which could be over a five year period. Economists expect the Fed to wait till sometime in 2013 to raise rates, with the signalling of Fed moves to reduce its holdings before raising rates....

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WSJ Lingling Wei's interview with Ding Xuedong, chairman of China Investment Corporation on its plans and strategies for 2015-2016, and future years. China's government formed CIC in 2007 to improve the returns on its foreign exchange reserves, estimated at $3.8 trillion in 2015. China Investment Corporation had largely stayed with low yields on U.S. Treasury debt till 2007. CIC has about $650 billion in assets in 2015. Its strategies provide insights into how China sees the outlook for the global economy. Ding sees opportunities in real estate and infrastructure, with a focus on the U.S. and Europe for steady cash flows. He singles out the U.S. as of particular interest as its economy rebounds. Strategies also include paring down of energy holdings. Foreign holdings are now $220 billion and have increased by 16.6% since 2009. A special unit CIC Capital was formed recently to more directly participate in managing foreign holdings with a long term view. Earlier focus of CIC on natural resources and commodities is now shifting as the commodities crisis has reduced long term prospects in that sector. The plan for the future is to shift to an allocation where financial products such as stocks and bonds are about 50%, and long term assets such as infrastructure investments, real estate and other investment take up the other 50%. At the end of 2013 equities and fixed income represented 57.4% of CIC global assets, and 28.2% were in long term assets. Ding wants to see China as the No. 2 engine for the global economy after the U.S. as No. 1. He sees the prospects for Brazil, Russia and South Africa as poor, and is optimistic about good performance from India, Mexico and Nigeria. On Japan Ding is skeptical of prime minister Abe's plans because he sees the lack of structural reforms in the efforts leading to a kind of lazy effort in his view. CIC is learning from the experience of other national investment funds and improving its in-house investment and management capabilities. Ding has many years of experience with China's Finance Ministry, the Cabinet, and the State Council. ...

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Lina Nilsson, the innovation director of the Blum Center for Developing Economies at the Universityof California, Berkeley, says female engineers are attracted to programs and research that focusses on achieving societal needs and goals, humanitarian projects, and meeting the special needs of developing economies. Better engineering that helps people improve lives attracts the involvement of women. She cites enrollment at the Blum Center for Developing Economies programs, PhD. minors in development engineering at UC Berkeley, undergraduate international minors at University of Michigan, the D-Lab at M.I.T., humanitarian engineering programs at Arizona State University, University of Minnesota, Penn State, Santa Clara University, Princeton's Engineers Without Borders chapters and clubs, where women's enrollment exceeds that of men. She contrasts this with the low numbers of women engineers in general- less than 20% of tech engineers at Google and Apple, and less than 14% in the U.S. workforce. Her advice- make work meaningful to society and women will enroll in large numbers, not just in computer engineering, also in mechanical and chemical engineering....

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Greece's political parties negotiated through the night of Feb. 9, 2012, over the details of the 130 billion euro aid package from the EU and the conditions laid out by the troika of the EU, IMF and ECB. The political leaders Papandreou and Samaras agreed on wage cuts -with a 22% cut in the minimum wage- and public sector job cuts, but resisted deep cuts in pension benefits which would leave a 300 million euros shortfall in 2012 budget targets. This is part of 3 billion euros in austerity measures set by the EU finance ministers as a condition for further aid. Another sticking point was the serious consideration given by the EU, according to EU economics commissioner Olli Rehn, that the 130 billion euros be placed in a special escrow account so that Greece's private creditors would be paid from the account before money was taken out for the Greek budget. This was seen by Greek political parties as an infringement of Greek sovereignty. The EU is requiring all the main political parties in Greece give written pledges agreeing to the program and the Greek parliament voting to approve it. The language used by Greece's finance minister, Evangelos Venizelos, as he put the choice to Greece, shows the difficult choices facing Greece, Venizelos said: "If we see our future and the salvation of the country in the euro zone, in Europe, we must do what we must do in order for the program to definitely be approved...If our country, our people prefer another political decision that necessarily leads out of the euro zone and therefore outside European integration, we have to say this clearly to ourselves and to our compatriots." Because the agreement is designed to get Greece's debt to 120% of GDP by 2020- it asks for a decade of austerity measures. Some experts say Greece is better of defaulting like Argentina and going back to the drachma to recover export competitiveness. Another factor complicating this is the rapidity with which the Greek situation is deteriorating and the lack of political consensus on austerity measures, with all poltical parties enjoying less than 25% support in the country making political party pledges meaningless. Elections are due in April 2012. The EU and Germany may be too focussed on getting through a March 20 deadline for a bond payment of 14.5 billion euros- because of nervous financial markets- and not able to gets its hands around the problem of long term unemployment and deteriorating economic situation facing Greece. Greece's unemployment rate increased from 18.2% to 20.9% in just one month from October 2011 to Nov. 2011, according to Elstat, the government statistics agency. Another difficulty is that the EU ministers may see the achievement of European unity as progressing without any pauses and corrections of course, as if in a straight line, when achievements of a vision of this kind take many years and problem solving; where even a Greek withdrawal from the EU could be a temporary step towards eventually rejoining in a better EU framework. ...

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CIC makes a shift in investment strategy away from energy assets to investment in Europe and the U.S., as western economies recover and the Fed tapers its bond purchases leading to credit outflows from emerging markets.

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Another useful piece giving insights to the way China has approached the economic development tasks and what this means for the future. China's development is very capital intensive because the cost of capital is really low. Inputs like land and energy costs are also kept low by the government. Cost of labor is low and this has resulted in the share of wages as a percentage of GDP to drop from 53% in 1998 to 41% in 2005 and it is dropping further. In America wages to GDP is 56% and includes investment income which in China is lessthan 2% but much larger in the USA. The pool of surplus labor in China does work to depress wages. The percentage of consumption to GDP in China has fallen from 47% in early 1990's to 36% in 2006, the lowest of the large economies. But this does not reflect a higher savings rate. In fact the household savings rate also has fallen as a percentage of GDP. According to World Bank's Beijing office this has fallen from 21% in mid 1990's to 15% in 2006, relative to personal disposable income it has fallen from 30% to 25%. This is lower than India's household savings rate. So what is going on. The Economist points to the lower share of wages as a percentage of GDP because the large pool of surplus labor has depressed wages from where they might otherwise be so that consumption is not where it could or should be for China to move away from manufacturing led export driven economy to one that depends on the domestic market for growth. Higher consumption and a bigger domestic market would make it easier to sustain strengthening of its currency, a key demand of western countries. This would also provide a fair deal to millions of migrant workers and reduce labor unrest. It would also reduce pollution as the economy would not be focussed on production at all costs. It appears that the existing model has worked well for China in bringing millions of people from the villages into cities and growing manufacturing industries, and in urbanizing China. But China is so large that there are millions another 200 million who would migrate from villages and rural areas into cities as migrant labor to 2020 according to what the Government envisions ( see article in this issue of the Economist "Barefoot Doctors"). But this model needs fixing or changing as the pollution costs are already severe and can prove catastrophic if continued, and the western countries are demanding strengthening of the yuan to correct imbalances in the trade deficits as a result of this model of development focussed on manufacturing and export industries and short on consumption in the domestic market enough to drive the economy. ...

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ECB president Mario Draghi tells a newsconference on April 14, 2015, that the bond buying program is "proceeding smoothly." He said that he does not see scarcity in the bond market. The ECB plans to continue its purchases of government bonds and other debt at a rate of 60 billion euros a month through September 2016. He said the program of very low interest rates for a very long time "is fertile terrain for financial instability imbalances," but he did not see evidence of systemically large financial imbalances at this time. The ECB approach would be to tackle the risks by using its power as a bank regulator, not by changing monetary policy, said Draghi. He was optimistic about the initial results, saying "more accomodative monetary policy is being translated into better credit conditions, which is something we have not seen before." The euro is down to $1.06 and low oil prices have helped improve economic conditions, as well as ongoing structural reforms pushed by the EU and ECB. Draghi's forecast for economic growth in the eurozone is now up from 1% to 1.5% for 2015....

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Prince Mohammed bin Salman, son of the Saudi king Salman, oversees economic policy. He says stock sales of 5% of Saudi Aramco will be used to create a sovereign wealth fund of about $2 trillion that would help create the jobs with income from overseas investments and projects at home. About three times the jobs created in 2003-2013 will be needed with the demographic changes, according to McKinsey consultants. This will act as a diversification away from oil income dependence.

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Prime minister Modi cites the successful Mars mission "Mangalayan" as showing India's technological capabilities and its ability to do things speedily at very low cost. For foreign investors India offers a stable politcal climate because his party has an absolute majority in parliament and controls many state governments, as well as being a democracy with a vibrant and internet connected young generation. A young population with 55% of the people under age 35 makes India the manufacturing powerhouse of the next two decades, said Modi. And the consumer base of over 1.2 billion people an attractive market. It was a rare combination of hands on salesmanship rarely seen ever on television from a prime minister. In one exceptional response about the condition of women, Modi said he personally led his ministers and legislators through Gujarat state's rural areas house to house in 45 degree centigrade summer heat on June 11-13 school opening days. He did this urging parents to send their daughters to school with the slogan "Send your daughter to school, Save a Girl." The result he said was 100% school enrollment in these rural areas for girls. A rare person at a special moment in India's history pushing the goals of development with uncommon tenacity....

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Malone describes the future of Silicon Valley and a return to its roots in a world of new devices closer to where Dave Packard and Noyce (followed by Jobs) started the first tech developments in California. He sees a larger Silicon Valley spread out over a much larger region by 2050.

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The Bank of Japan's plans to buy 100 trillion yen of Japanese government debt in 2 years to fight deflation is having a positive effect on the eurozone economies. Japanese investors are buying eurozone sovereign debt. J.P. Morgan estimates the increase in investments for overseas bonds by Japanese investors in 2013 at 45 billion euros. This is lowering the yields on the sovereign bonds of France, Netherlands and Austria to record lows and lowering the yields of sovereign bonds of Italy and Spain. The 10 year yields on Italy's government bonds declined to 4.326%. Yields on 10 year Japanese government bonds was 0.514% on April 8, 2013.

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Hong Kong's new chief executive, Leung Chun-ying, is intervewed by the WSJ's Te-Ping Chen, Jeffrey Ng, and Robert Thomson. He was elected by 1200 business and political leaders in 2012. The term ends in 2017, by which time China says it will hold direct elections with universal suffrage in Hong Kong. Leung plans pro-growth policies and says Hong Kong's growth rate of about 4% for the last two decades lags too far behind Singapore's over 6% growth rate. No action is planned to reduce property prices by providing new land supply. He sees more room for growth in maritime insurance and ship financing services to complement Hong Kong's development as a global shipping center, citing London as an example. To improve the problem of cramped housing space and small apartments he is looking at ways to build new towns in the New Territories, which are on the border with mainland China. Leung will not change Hong Kong's flat tax structure, and is not going to follow Singapore's example in granting tax holidays. Growth in China will be about 7% in 2012, and future growth will depend on how fast China shifts from export led growth to domestic consumption....