China sets up new unit to manage investment of reserves
The People’s Bank of China (PBOC) is setting up a new company or agency to handle the investment of a portion of the country’s huge foreign exchange reserves, but details have yet to be announced, according to Chinese press reports.
Earlier, Wu Xiaoling, deputy governor of the PBOC, told the opening session of the Chinese People’s Political Consultative Congress (CPPCC) on March 3 that the bank was getting ready to launch a “foreign exchange investment management company” to handle the investment of a portion of the reserves.
The CPPCC is an advisory body that meets ahead of the NPC each year in early March.
Wu did not confirm the size of the company and would not confirm speculation that the company would have $200 billion under its control, one report said. There was no yardstick for the size of the company, and issues such as where the money should be invested were more critical, the report quoted Wu as saying.
Wu said the State Administration of Foreign Exchange (SAFE) would in future become one part of this new unit, but she added that the role of SAFE would not undergo a major change.
The focus of the new company may be purely one of protecting the value of its foreign exchange holdings through hedging, rather than seeking investment returns, said one analyst in Hong Kong.
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