China Seeks to Actively Invest Foreign Exchange Reserves

In September 2007, China established the China Investment Corporation (CIC) as a vehicle to invest its foreign exchange reserves. The CIC reports directly to the State Council, and is led by its Chairman, Lou Jiwei, the former Deputy Secretary-General of the State Council. The CIC's US$200 billion in capital was funded through the domestic issuance of special treasuries, and the organization plans to invest 2/3 of this capital in domestic financial institutions, and 1/3 of it overseas. The CIC's challenges include ensuring a high investment yield and meeting overseas disclosure and transparency requirements