September 30, 2007	Sunday	Ramazan 17, 1428

BEIJING, Sept 29: China launched on Saturday a long-anticipated state-owned investment company that is intended to manage around $200 billion, or nearly one sixth of the nation’s massive foreign exchange reserves.

The China Investment Corp. will be headed by Lou Jiwei, a former vice finance minister, according to a statement issued by the new company, which took pains to stress the company’s independence from government interference.

“The company will operate based on the principle of separating management and government,” said the statement issued at the grand opening in Beijing’s recently erected New Poly Plaza.

“The company will function independently and based on commercial principles,” it said.

The statement seemed to be aimed at concerns, voiced overseas, about the exact nature of the new organisation, and whether, for example, it would be used to help satisfy the nation’s enormous thirst for energy and natural resources.

“The company will contribute funds. It’s not a bad thing,” said Zhang Taowei, a finance professor at Beijing’s Tsinghua University.

“If the Americans are concerned about this, it’s because they’re still stuck in Cold War thinking.”

The company, which will be in charge of the largest fund of its kind anywhere in the world, emerges at a time when China, long a magnet for foreign investment, is surfacing as a major source of capital in its own right.

China’s reserves, the world’s largest, surpassed $1.33 trillion at the end of June, boosted by the nation’s ballooning trade surplus. About 70pc has generally been believed to be held in US dollar denominated paper, principally US government bonds.

This has proved a less-than-ideal solution, given not just the low yields on government debt, but also the weakening of the US currency.

The company will try to maximise the proceeds via long-term investments “within a range of acceptable risks,” according to unnamed sources quoted by state-run Xinhua news agency.

—AFP