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Talent shortage restricting forex diversification: expert

By Cong Mu (Global Times)

08:07, May 28, 2012

China invests over one-third of its $3 trillion foreign exchange reserves in US Treasury bonds because the country lacks enough financial talents with international expertise to manage a diversification, Long Yongtu said at a forum in Nanjing, Jiangsu Province over the weekend.

China's former chief negotiator with the World Trade Organization (WTO) said that the country's foreign reserves have increased manifold since China's accession to the WTO, while the talent pool to manage such huge reserves has failed to catch up.

China's US T-bonds holding increased by $14.7 billion to $1.17 trillion in March, the largest in the world, the US Department of the Treasury said on May 15.

"The reason why we cannot buy into Morgan Stanley or Lehman Brothers is because we don't have the talents [who can manage the purchase]," Long said.

China Investment Corp, the country's sovereign wealth fund set up to help diversify forex investments, made a 60 percent paper loss on its $3 billion investment in US private equity firm Blackstone Group in 2008.

Besides the talent shortage, the size of China's forex investments also poses challenges for the decision-makers, Tan Yaling, president of the China Forex Investment Research Institute, told the Global Times yesterday.

"Because China's forex investments are very big, they often attract market attention, complicating the deals," Tan said.


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