China Investment Corporation has revised downward the amount of new financing from the government.

Press reports in mainland China report the CIC is now requesting $100 billion of new assets from the Ministry of Finance. Apparently its initial request, for $200 billion, was rejected by the Ministry. The new request is expected to be forwarded to the State Council for final approval.

The CIC was originally set up three years ago with $200 billion of seed capital from the government, with a mandate to seek investment returns on China's foreign-reserve surplus, which stood at $2.3 trillion at the end of 2009.

"Three hundred billion or four hundred billion -- it's still a lot of billions," says one salesperson at a global asset manager.

CIC has been very active of late across the spectrum of long-only and alternative asset classes, and it continues to move aggressively in order to put China's reserves into return-generating exposures.

Last year it returned 17% on its international portfolios, a very good return for an organisation of its size. This may explain why CIC officials expected their original request for another $200 billion would have been approved. Indeed, even having its seeding expanded by $100 billion is a mark of the government's faith in the CIC's capabilities.

However, of the CIC's initial $200 billion, about half has gone to domestic investments. Peter Alexander, principal at consultancy Z-Ben Advisors, says around $100 million has gone to supporting domestic financial institutions such as China Development Bank, or to Central Huijin, a Temasek-like subsidiary with stakes in Hong Kong-listed banks.

"The CIC only put away $100 billion in the past two years, so that may be why its getting a similar amount of money for this year," says Alexander. He says it's reasonable to expect that, should 2010 prove another successful year for international investments, the CIC can ask for bigger allotments in 2011. But it needs to prove it can allocate big amounts in a short period of time, without taking unnecessary short-term risks.

Z-Ben notes that a parallel request from Central Huijin for $50 billion has also been downsized and may be converted into a RMB190 billion ($28 billion) bond issue, rather than a state grant.