CFIUS on the Table Again: China Buys a 9.9% Stake in Morgan Stanley

A Chinese Sovereign wealth fund, China Investments Company, has bought stock rights in Morgan Stanley that will enable CIC to own 9.9% of the equity of the company by 2010.  The agreement apparently gives no "management power" to CIC.  [What does this mean? Now? Or just until 2010 when CIC is a 9.9% shareholder.] CIC is flush with dollars from China Central Bank currency purchases of dollars for yuan, designed to keep its peg of the yuan to the dollar in place.  So we now have the hard case.  The CIC fund is not "investor" driven, nor will it be.  The fund acts on government initiatives.  The CEO of Morgan Stanley, in announcing the sale admitted as much when he noted that the investment would enable Morgan to "pursue" opportunities in China.  Read between the lines:  A condition of the sale is that Morgan Stanley operates in China.  This is not a request from an investor interested purely in the highest return, nor is it a decision from Morgan interested purely in a highest return on its new funds.  CFIUS should take a close look at this.