China considers fund to buy overseas resources

Beijing is considering using a portion of China’s foreign-exchange reserves to set up a fund that will help domestic oil companies acquire overseas resources, the South China Morning Post reported. According to a report in China Oil News, the mouthpiece for state-run China National Petroleum Corp, the central government may allocate a "certain proportion" of foreign exchange reserves for this purpose. The report quoted content from a national energy work meeting held in Beijing this month. Beijing would also reduce or exempt resource taxes on certain reserves of domestic oil companies in order to encourage exploration. Analysts told the paper the proposal may do little to help Chinese oil firms acquire overseas resources, as these firms’ main obstacle is political not financial. Separately, the report said Beijing had set a national production target of 192 million tons of crude oil in 2009, 196 million in 2010 and 198 million in 2011.