Funds News
- Legislature mulls fund for forex investment
Date: 28-Jun-2007 Sources: (Shenzhen Daily)
THE government took a big step yesterday towards establishing a fund that will invest US$200 billion of the country's US$1.2 trillion in foreign exchange reserves in assets around the globe.
The embryonic agency has already spent US$3 billion on a 10 percent stake in Blackstone, a U.S. private equity group, as part of a drive by the government to earn higher returns by making riskier investments.
The Standing Committee of the National People's Congress (NPC), or the country's top legislature, started to review a proposal that would authorize the Ministry of Finance to issue 1.55 trillion yuan (US$203.5 billion) in special treasury bonds to buy about US$200 billion in foreign exchange to fund the start-up of the agency, Xinhua reported.
The proposal, submitted by the State Council, or Cabinet, is almost certain to be approved by lawmakers.
Xinhua said the tenor of the bonds would be at least 10 years and the interest rate would depend on market conditions.
Xinhua did not say whether the bonds would be issued directly to the People's Bank of China, which controls China's reserves, or sold in the domestic market with the proceeds used to buy foreign exchange from the central bank.
China currently invests the bulk of its reserves in safe but relatively low-yielding U.S. bonds.
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