advances and global competitiveness. Well-developed U.S.  bankruptcy laws also form part of this advantage, as few other  countries have refined this framework as successfully. Global Currency Standard and Deep Financial Markets – The U.S. has both the deepest financial markets in the  world, as well as the global reserve currency. No country  has yet come close on either. This is an incredible advantage  which the United States possesses and provides tremendous  strength and flexibility while they solve their fiscal issues. The most commented on economic item is the impact of a  Chinese slowdown on China, and the global economy. Our  take is that many forget that this is largely the law of big  numbers at work as the Chinese economy is now the second  largest in the world. One must remember that at $8 trillion,  even 6% growth creates a GDP increase which in itself is  larger than most countries’ GDP, and in aggregate as large as  the growth being added by the United States to the world’s  economy annually.  The China Story We were fortunate to find a Chinese partner that not only  recognized that our brand of institutional capital management,  asset management and operations is greatly needed within  China, but also owns one of the highest quality commercial  property portfolios in the country. While we will only own  22% of the entity, we will be providing a number of our people  into positions within the company. Our growth plans for  China Xintiandi will be market and opportunity dependent,  but we believe we can assist our partner in becoming one  of the leading owners and operators of premier commercial  properties within China.  Our success depends on our ability to find opportunistic  investments in real assets around the world, underwrite and  acquire the assets, and operate them well in order to generate  our targeted returns. While we have made small investments  in China in the past, we were unable to find a significant  opportunity where we could invest comfortably. During 2013,  we found such an opportunity with a portfolio of Shanghai  commercial properties. The Chinese economy is incredibly large and diverse,  and contains some economic regions that at best would  be described as “pioneer,” has regions that are classically  “emerging,” but most importantly has regions that are fully  competitive on a global stage. Our view is that the Chinese  economy will experience peaks and valleys along a rapid  growth path. But by being careful with how we invest and  by being integrated into the economy, these transitions will provide many opportunities for us, as they do in other  countries around the world. The initial portfolio of properties owned by China Xintiandi  consists of over 3.4 million square feet of premier quality  office and retail assets in two truly irreplaceable locations  within Shanghai. We believe Shanghai is one of the world’s  leading cities and we are thrilled to be able to be a part of its  future. Operations The misunderstanding by many Western observers lies in  the premise that once China stumbles, it will fall behind, and  never come back. To put this into context, one can compare  China to the United States. In 1820, agriculture represented  80% of the U.S. economy. By 1920, agriculture had declined  to 25%, and during this century of transition and growth there  were both good and not so good economic periods. Contrast  that to China, where in 1975 agriculture represented 80%  of the Chinese economy and by 2030 it will represent 25%.  In these 55 years of transition there were, and will be, many  economic cycles. But like the U.S., we believe China will be a  good place to invest over the long term. Overall assets under management are over $187 billion with  fee bearing capital increasing to $79 billion. The distribution  is as follows: Total carried interests realized in the year were $565 million  with our expected annualized target carried interest now  approximately $350 million based on current private fund  capital. Fee related earnings increased by nearly 70%, due to  US$ billions Assets Under  Management Fee Bearing  Capital  Property $  108 $  30 Renewable Energy 19 11 Infrastructure 29 22 Private Equity  31 16 $  187 $  79 2013 ANNUAL REPORT 7