Home / World Business
Sat, Feb 03, 2007 - Page 10 News List

China planning new firm to manage its huge forex reserves


China plans for a special firm to manage one fifth of its foreign exchange reserves, laying the foundations of a behemoth that will handle more money than the biggest mutual fund in the world, state media said yesterday.

The State Foreign Exchange Investment Company is expected to be in charge of US$210 billion, or more than the Growth Fund of America's approximately US$160 billion 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," said an official with Central Huijin Investment Co (中央匯金), a government investment arm.

The State Foreign Exchange Investment Co will get its US$210 billion as part of a plan to divide China's US$1.07 trillion of reserves into three portions, the Southern Weekly paper said, giving no sources.

Another US$100 billion will be allocated to Huijin, according to the paper. The Huijin official said that he knew nothing about it.

The remaining US$700 billion will remain under management by the State Administration of Foreign Exchange, according to the paper.

The State Foreign Exchange Investment Co 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 will also allow commercial banks to again carry out financial leasing, a business they were required to withdraw from in 1997, state media reported yesterday, citing the industry regulator.

Both local and foreign banks will be permitted to set up financial leasing companies from March 1, the China Daily said, citing the China Banking Regulatory Commission.

Eligible investors should conform with various requirements, including a capital adequacy ratio of no less than 8 percent. The rule also reduced the minimum registered capital for a financial leasing company from 500 million yuan to 100 million yuan.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top