China to invest forex across global markets
CHINA Investment Corp Ltd, the state investment company set up to gain better returns on China’s huge foreign exchange reserves, will invest in all markets worldwide except those that make settlement in the yuan, Chairman Lou Jiwei said yesterday.
Lou, a delegate to the ongoing 17th National Congress of the Communist Party of China in Beijing, said the company will operate in “a completely commercial way.”
“Some media reports have said China has political considerations behind the company, but I think that is an unnecessary worry,” he said.
The company, inaugurated late last month, has a board of directors and a supervisory committee that ensures its commercial operation, Lou said.
It is now working on corporate regulations and building its team.
The company will communicate with international financial institutions, multinational organizations and supervisory institutions in foreign countries, he said.
The company’s US$200 billion in registered capital comes from China’s foreign-exchange reserves. It is being assembled through the issuance of 1.55 trillion yuan (US$206 billion) in special treasury bonds by the Ministry of Finance.
China’s foreign exchange reserves reached US$1.43 trillion at the end of last month, up 45.1 percent from the same period last year, according to the People’s Bank of China.
In May, the new company, still in its preparation phase, made its first investment in US$3 million worth of nonvoting shares in Blackstone Group, a private equity firm based in the United States.
Also yesterday, Minister of Finance Xie Xuren said China will continue its “prudent” fiscal policy for the foreseeable future and keep the size of deficits and treasury bonds at “sound” levels.
Xie, who is also a delegate to the Party Congress, said the government will coordinate fiscal and monetary policies in a drive to strengthen and improve macroeconomic management.
Using a “scientific outlook on development,” Xie said the Ministry of Finance will implement policy incentives to encourage innovative companies and increase state investment in research and development in key national labs.
The financial and taxation branches of the government must build institutions that support a resources-efficient and environmentally friendly economy, Xie said.