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Forex reserves put to 'innovative use'

By Hu Xiaocen (Shanghai Daily)

08:09, January 15, 2013

CHINA has widened the investment scope of the country's foreign exchange reserves by allowing entrusted loans to commercial banks which use them to help support Chinese enterprises investing overseas.

The State Administration of Foreign Exchange has set up the SAFE Co-Financing, an office whose task is encouraging the "innovative use" of the foreign exchange reserves in line with market principles, SAFE said on its website yesterday.

The office will respect "market choice and willingness" to defend and promote "fair competition," SAFE said.

SAFE also said the entrusted loans to commercial banks aimed to support Chinese companies to expand overseas, broadening the investment scope of the foreign reserves.

China holds the world's largest foreign exchange reserves of US$3.31 trillion at the end of last year. About 70 percent held by the central bank are in US dollars with the euro and gold taking up a smaller size.

China has been seeking efficient use of the foreign reserves by urging companies to accelerate overseas investments. The Ministry of Commerce said earlier this month that China's foreign direct investment has grown in the past decade.

Non-financial outbound investment topped US$62.5 billion in the first 11 months of 2012, with a quarter made via mergers and acquisitions.

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