China is on the verge of launching a new $300 billion investment vehicle that would boost returns on foreign exchange reserves by setting up funds targeting two separate regions—the U.S. and Europe.
The vehicle had been planned prior to the onset of the European debt crisis, and was designed to boost returns on China’s foreign exchange reserves by making more aggressive overseas investments, Reuters reported. The vehicle, according to two sources who declined to be named, is to operate two funds, one focused on U.S. investments and the other on European investments.
The new vehicle, details of which are still under discussion, would be affiliated with China’s State Administration of Foreign Exchange (SAFE). That is the portion of the central bank that is responsible for the daily management of China’s $3.2 trillion in foreign exchange reserves.