At an official Chinese New Year's party earlier this year, a former bond trader named Zhu Changhong was hailed for the smart choices he made investing the world's largest stash of cash: China's $3.5 trillion in foreign reserves.
"The east is red, the sun rises. From China arises Zhu Changhong he is SAFE's savior." SAFE is China's State Administration of Foreign Exchange, the division of the central bank that manages China's currency reserves and is one of the most powerful investors in the world. Chinese media call him 'invisible.'
A 43-year-old former physicist, Mr. Zhu has made one surprising turn after another in his career. At 20 years old, he moved from impoverished Anhui province to the University of Chicago to study quantum physics, but he then chucked a promising academic career to become a bond trader.
There, Mr. Zhu took on the trappings of the American dream, buying two luxury homes in California and a condo in Las Vegas, according to U.S. property records. But he left that life behind to return to China in late 2009 to become the chief investment officer at SAFE's reserves-management department.
But he has made his mark at SAFE, persuading his superiors to invest more in U.S. corporate bonds, equities and real estate, rather than rely on the safe-but-dull investments in U.S. Treasurys that were SAFE's hallmark before Mr. Zhu took the reins.
In a recent sign of his more aggressive style, SAFE bet on Japanese equities in the second half of last year before they rose sharply in value, said individuals familiar with his work, though the size of the position wasn't clear. SAFE "had a very good year last year" under Mr. Zhu's direction, said a Chinese official. SAFE doesn't disclose its investments and performance.
Mr. Zhu joined SAFE after spending 20 years in the U.S. He was personally recruited by SAFE's director, Yi Gang, who himself had spent many years in the U.S. as an economics professor at Indiana University-Purdue University Indianapolis, according to people with knowledge of the agency's workings. Mr. Zhu was a big catch for Beijing, whose '1,000 talents program' offers cash awards and research funds to get back talented expatriates, the people said.
With Mr. Zhu's endorsement, SAFE was an early investor in bonds issued by the European Financial Stability Fund, according to those involved, and has invested regularly since then in the bailout fund.
Mr. Zhu's transformation into investment guru still surprises some old acquaintances. "Those with an entrepreneurial drive went to Wall Street," said physicist Paul Wiegmann, Mr. Zhu's thesis adviser. He said he thought the fast pace of a trader fit his former student, who finished his dissertation in two years, half the usual time.
"I thought he'd do well, but doing so well, that's a surprise," Mr. Wiegmann said. "He came from a foreign country, from a rural area, with no experience in the culture and the operation of [U.S.] society. He's literally self-made."
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