China To Form Company to Invest Foreign Currency Reserves

Fri Mar 09 14:04:43 -0800 2007
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China's government will create an investment firm to start investing its over one trillion dollars worth of foreign currency reserves, most of them U.S. treasury securities and other U.S. dollar denominated papers.

Currently the Chinese government is making about 3% on its holdings of foreign reserves, but may be able to get almost 20% by higher risk investing in companies, gold, real estate, energy and banks.  This move could raise U.S. interest rates, and it is unknown how much foreign securities they actually hold or how much they might invest.