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China's State Pension Fund to Invest Overseas

China's National Council for the Social Security Fund (SSF) on Monday signed deals in Beijing with two global investment trustees to assist with its upcoming overseas investment operations.


The SSF Council started to seek out global investment trustees at the end of April and the Northern Trust Corporation and Citigroup Inc. of the Unites States were selected.


Although a specific overseas investment quota has not been announced, Xiang Huaicheng, Chairman of the National Council, said Monday the move to place funds overseas would avoid risky investments.


The SSF gained approval from the Chinese government to use part of its assets for overseas investment on May 1. Financial experts believe overseas operations will assist them explore more opportunities, diversify risks and maintain and increase the value of the fund.


It was set up in 2000 by the government as a strategic reserve for an aging population and its total assets were valued at 201.02 billion yuan (US$25.1 billion) at the end of 2005. The fund comes mainly from budgetary allocation by the Ministry of Finance as well as revenues from the sale of shares of State-owned firms listed overseas.


Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of asset and fund administration, investment, management, fiduciary and banking solutions for corporations, institutions and individuals worldwide.


As of March 16 this year Northern Trust was given approval by China's banking watchdog, the China Banking Regulatory Commission, to open its first branch office on the Chinese mainland.


Citigroup Inc. now has six corporate bank branches in Beijing, Shanghai, Tianjin, Chengdu, Guangzhou and Shenzhen. They’ve also opened 12 consumer bank outlets on the Chinese mainland with 2,600 local staff.


In August 2006 Citigroup received a Qualified Domestic Institutional Investor (QDII) license. This enables them to make international investments on behalf of Chinese companies and individuals. The bank also received approval to offer custodian services to banking institutions in China that are qualified to provide overseas wealth management services under the QDII program.


(Xinhua News Agency October 10, 2006)

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