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China forex agency to have more money than world's biggest mutual fund
2007-02-01
China plans a special firm to manage one fifth of its forex reserves, laying the foundations of a behemoth that will handle more money than the biggest mutual fund in the world, according to state media. The State Foreign Exchange Investment Company is expected to be in charge of 210 billion dollars, or more than the Growth Fund of America's approximately 160 billion dollars of assets, according to the reports. "The State Council proposed at the national finance work conference (last month) to set up a special forex investment institution," an official with Central Huijin Investment Co, a government investment arm, told AFP. The State Foreign Exchange Investment Company will get its 210 billion dollars as part of a plan to divide China's 1.07 trillion dollars of reserves into three portions, the Southern Weekly paper said, giving no sources. Another 100 billion dollars will be allocated to Huijin, according to the Southern Weekly. The Huijin official told AFP he knew nothing about it. The remaining 700 billion dollars will remain under management by the State Administration of Foreign Exchange, according to the paper. The State Foreign Exchange Investment Company will raise funds by issuing bonds denominated in the local currency and use the proceeds to buy reserves from the State Administration of Foreign Exchange, the China Daily paper said. China's forex reserves, which are likely to swell further as China's trade surplus with the outside world continues, are mostly invested in US Treasury bonds. Premier Wen Jiabao told last month's financial work conference that China should "explore new means and extend channels" for the use of its reserves.
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