China's Vice Minister of Finance Li Yong disclosed plans for the China Investment Corporation (CIC) Wednesday, dispelling rumors that China would try to buy out European and American companies in large numbers.

Li said one third of CIC's capital would be used to purchase Central Huijin, which now controls China's major state-owned commercial banks; another third to replenish the capital of the Agricultural Bank of China and China Development Bank; and the remaining one third to invest in global financial markets.

Li told the International Finance Forum in Beijing Wednesday that the CIC's investment in world financial markets would be realized gradually and in a cautious way.

The CIC would not buy into overseas airlines, telecommunications or oil companies.

"The CIC will make things more transparent, and learn best practices from other sovereign wealth funds," said Li.

The CIC was launched in September to mitigate the risks in China's huge foreign exchange reserve.

It has US$200 billion in registered capital allocated from China's foreign exchange reserve. The Ministry of Finance issued 1.55 trillion yuan (US$208 billion) worth of special treasury bonds to buy the forex reserve and inject the fund into the CIC.

By the end of September, China's forex reserve exceeded US$1.43 trillion, the highest in the world, up 45.1 percent year-on-year, according to the People's Bank of China.

In May, the new company, still in preparation, made its first investment in non-voting shares, valued at US$3 billion, in the US private equity firm, the Blackstone Group.

A previous report said that a special department on private equity investment had been set up within the CIC which would also focus on equity investments and fixed-return investments.

(Xinhua News Agency November 8, 2007)