State investment firm faces huge challenges
By Ba Shusong (China Daily)Updated: 2007-03-23 09:20
The author is a researcher with the Development Research Center of the State Council
The much hyped State investment company set to be launched faces multiple challenges ranging from establishing transparent management under laws as yet to be written to showing solid financial gains.
Zhou Xiaochuan, governor of the People's Bank of China the central bank revealed during the National People's Congress session that policymakers are tapping new channels to expand the investment scope of the country's huge foreign exchange reserve.
The new company is expected to be under the direction of the State Council, China's Cabinet, while professional managers will handle the reserve fund.
Most of the world's state foreign exchange investment companies, such as Singapore's Temasek Holdings, have had only a limited scale of investment funds.
In contrast, in China, even if the company's initial fund is $200 billion, as the market expects, and it is not increased, it will be the largest investment company in China.
Moreover, the fund is expected to grow.
Such a large scale fund will attract attention from the international market. The managers of the fund must be adept at maneuvers in the international capital market and familiar with global economic growth trends.
The managers will undoubtedly face pressure for proper management. The new
company will also face pressure for earnings.
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