China Creating Conpany to invest US 1 TRILLION
Date: Friday, March 09 2007
China creating company to invest US$1 trillion reserves
The Associated Press
Friday, March 9, 2007
BEIJING: China is creating an investment company to make more profitable use of its US$1 trillion in foreign currency reserves, the finance minister said Friday, in a move that could change the flow of billions of dollars in global markets.
Finance Minister Jin Renqing gave no details of how the Cabinet-level company might invest the reserves, which are believed to be mostly in safe but low-yielding U.S. Treasury bonds. He also did not say what portion of the reserves might be channeled through the company or when it would start to operate.
"We can achieve more profit from the investments," Jin said at a news conference. "We are now preparing the organization of this new corporation."
Analysts have speculated for some time that China would create an investment company, and officials have said repeatedly they want to make better use of the country's reserves.
Economists have suggested Beijing might allocate as much as US$200-400 billion (€150-300 billion) to the new company, which in a single move could create one of the world's richest investment funds.
"They want to be more aggressive than what they do with current reserves," said economist Mingchun Sun at Lehman Brothers in Hong Kong.