The Biden Administration is mulling the creation of a US sovereign wealth fund capable of making large investments in strategic areas, according to Bloomberg. White House officials said the matter had been “Quietly” studied for months, led by Harry Stack Sullivan, the President’s national security adviser, and Singh, his deputy, the fund’s structure, funding model and investment strategy are still under“Active discussion”, but the discussions have been“Serious enough” to involve the US government, follow-up communications with Congress and the private sector are also planned.
Such investments could be used to make supply chains more resilient, the official said, and could provide greater funding for“Illiquid but solvent companies” to cope with geopolitical competition. For example, emerging technologies with high barriers to support, including shipbuilding, geothermal, nuclear fusion, quantum encryption, and so on, can also be used to purchase key mineral resources to form strategic reserves. The fund may be drawn up in the final months of the Biden administration, the report said.
The mooted creation of a sovereign wealth fund is a sign that the US is straying from what it calls“Economic orthodoxy” in response to geopolitical competition, the Financial Times said yesterday. Until now, the US government has been sceptical of sovereign wealth funds set up around the world, arguing that investments by government sovereign wealth funds distort global trade and investment and constitute unfair competition. The Biden administration has changed tack because it believes it lacks “Flexible and patient funds that can be used to advance American strategic interests”, the“Pace and scale” of the investment should meet the US’s need to“Win in a competitive geopolitical environment”.
Foreign media reports said there appeared to be a rare meeting of minds between Biden and former President Donald Trump over the creation of a sovereign wealth fund. Indeed, it was Donald Trump’s public statement last week that the idea of a US sovereign wealth fund had jumped to the fore as a political issue, then the White House released Biden’s staff members about the brewing plot.
Some analysts believe that the U. S. sovereign wealth fund matters are likely to be democratic, Republican bipartisan cooperation. However, in a Bloomberg Television Lawrence Summers, the former US Treasury Secretary questioned whether sovereign wealth funds in countries such as Norway and the Middle East were being funded by huge foreign exchange reserves built up by massive resource exports, while at the moment, the U. S. Government faces a large financial, trade deficit and debt-ridden economy with no additional capital surplus to run.0