The establishment of a state investment agency to generate better returns on China's foreign currency reserves does not mean the country will stop buying US Treasuries, said central bank Vice Governor Wu Xiaoling. About three-quarters of China's US$1 trillion-plus forex is believed to be held in US dollar-denominated assets, partly due to Beijing's efforts to retain tight control of the yuan. Speaking at a meeting of central bank governors from the Group of 10 nations, Wu added that no timeframe had been set for creating the agency, Bloomberg reported. Finance Minister Jin Renqing officially announced the new body to manage a portion of China's US$1 trillion-plus forex reserves at the National People's Congress on Friday. He said the reserves would be managed prudently but also with profitability and efficiency in mind, the Financial Times reported. Jin added that the agency will be modeled in part on Temasek, the investment arm of the Singaporean government. It is thought that Lou Jiwei, a former vice-minister of finance, will run the agency with an initial quota of US$300 million.
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