"CIC looks a bit like a hedge fund now. It has a bit of everything, fixed income, equities and alternatives. It did really well last year because it's putting more money to work and also in highly cyclical sectors, such as oil and gas."

The China Investment Corporation (CIC), a sovereign wealth fund responsible for managing some of the country's foreign exchange reserves, has reported an 11.7 per cent return on its global investments last year.

The corporation invested an additional 35.7 billion US dollars last year, favoring equities and alternative investments such as private equity, real estate and infrastructure. That left the fund with just 4 per cent remaining in cash in its 135.1 billion US dollar global portfolio.

Gu Wei, a columnist with Reuters Breakingviews, said that she thought the CIC performed well last year, but that they should hold some reserves to cushion the impact of any potential hard landing.

"The CIC looks a bit like a hedge fund now. It has a bit of everything, fixed income, equities and alternatives. It did really well last year because it's putting more money to work and also in highly cyclical sectors, such as oil and gas," she said, adding that while these reserves have been doing well, they are really there to cushion China in the event of a hard landing. She said that in that scenario, "highly cyclical sectors aren't going to do well. Oil and gas (markets) are probably going to suffer. That would just compound the economic pain that China's going to suffer."

The corporation has revealed that it was "essentially fully invested" at the end of 2010, underscoring its need for a fresh injection of cash from the government if it is to further expand its reach overseas.

Gu Wei indicated that this isn't actually anything new. She said that the CIC has been asking for money for several years. But she said that the government seems to be resisting calls for a fresh cash infusion.

"The government probably has more concerns: it's good for CIC to make strong returns certainly. But on the other hand, is that really the best goal for China's management or reserves? Maybe they are right to be cautious, maybe safety should take priority over returns" she said.

The CIC was set up in 2007 with an initial 200 billion US dollars of capital from China's finance ministry. The mandate of the corporation is to invest some of the country's foreign reserves in riskier offshore assets. At that time, China had less than 1,500 billion US dollars in its foreign exchange coffers.

Now China's reserves, already the largest in the world, have grown by nearly 200 billion US dollars in the first quarter to top 3,000 billion US dollars for the first time, according to a report published in the Financial Times in April.