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BEIJING - 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, state media said Friday.
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," an official with Central Huijin Investment Co, a government investment arm, told AFP.
The State Foreign Exchange Investment Company 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 Southern Weekly. The Huijin official told AFP 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 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. - AFP/ir
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