39 Hong Kong L.J. 197 (2009)
Negocio de China: Building upon the Santiago Principles to Form an Effective International Approach to Sovereign Wealth Fund Regulation

handle is hein.journals/honkon39 and id is 199 raw text is: NEGOCIO DE CHINA: BUILDING UPON THE SANTIAGO
Jason Buhi*
Sovereign Wealth Funds (SWFs) possess unlimited potential for public wealth
creation, but there ought to be some scepticism about state investment activities
in the absence of proper regulation. Massive state capital flows could be used as
a disguised form of aggressive foreign policy or a destabilising weapon for political
rather than financial ends. The Santiago Principles (a recent transnational
attempt to produce voluntary regulation of such activity) merely reiterate the
wanting status quo. If the investment constraints practiced by the new Chinese
Investment Corporation (CIC) were adopted as the regulatory model instead,
the regime would be far more effective. In this article, the author presents a brief
overview of SWF trends, highlighting the growing distinction between capitalism
and democracy with the international resurgence of authoritarian-capitalism.
Next, the CIC is presented as an example of the possibilities and dangers of state
projections of economic power into private markets, including a selection of the
Santiago Principles being examined in the context of the CIC's activities. Finally,
three cardinal principles of SWF investing extracted from CIC practice will be
offered which should underlie a binding international regime.
1.   Introduction
The International Working Group of Sovereign Wealth Funds (IWG)
was established in Washington, D.C. in the midst of the subprime finan-
cial meltdown. Even as Western politicians scrambled to construct bailout
packages for their battered economies, a series of meetings were held to
devise a code of best practices for a particularly resilient class of investors:
sovereign wealth funds (SWFs).' The resulting Santiago Principles, or
Generally Accepted Principles and Practices (GAPP), recognises SWFs
as well-established institutional investors and important participants in
LL.M., The University of Hong Kong, 2008; J.D., The Pennsylvania State University Dickinson
School of Law, 2006. The author wishes to thank Rotary International and Rotarians everywhere
for their continued support of the Ambassadorial Scholarship program.
1 From 30 April to 1 May 2008.

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