China will support international investment by companies next year as part of its effort to expand channels for such outbound ventures, said Wei Benhua, deputy director of the State Administration of Foreign Exchange.

 

China will also relax controls on individual overseas investment, Wei said on Saturday at a conference in Beijing.

 

"The move will help solve the problem of China's imbalance of international payments and the increase in currency reserves. It is also good timing for China to open its capital accounts," Sun Mingchun, an economist at Lehman Brothers Holdings Inc in Hong Kong, said last Saturday in a telephone interview with Bloomberg News.

 

A record trade surplus and inflows of speculative capital betting on faster yuan gains have pushed up China's foreign exchange reserves to about US$1.4 trillion, fueled asset bubbles and driven up inflation. China's top currency regulator, Hu Xiaolian, said on December 5 that China should expand channels for overseas investment and relax controls on capital outflows.

 

Relaxing controls on individual investment "can help China's individual investors diversify risks from the local stock markets," Sun said.

 

China Investment Corp may invest in China Petroleum & Chemical Corp to help fund the oil company's investments abroad, China Business News reported on Friday.

 

China Petroleum & Chemical, also called Sinopec, would be the first central government-owned company to get cash from CIC for overseas purchases, the Shanghai-based newspaper said.

 

(Shanghai Daily December 24, 2007)