China's first industrial fund is likely to be set up soon in Tianjin, in order to finance the development of a proposed national-level economic development area, officials with the city said yesterday.

"Preparations are under way, and (the fund) will probably start operating shortly," said Li Yali, director of the city's Development and Reform Commission.

The Bohai Industrial Fund is expected to raise 20 billion yuan (US$2.4 billion) from the public to fund the industrial development and infrastructure construction of the Binhai New Area (BNA) to be set up in Tianjin. The first issuance will total 5 billion yuan (US$617 million). A company will be set up to manage the funds.

Li said the city is also planning a new reinsurance company to support the growth of the BNA, but declined to give any further details.

"We are also going to establish a reinsurance company for the Binhai New Area," he told China Daily. "We are still working on the plan."

Dai Xianglong, mayor of Tianjin, said the establishment of industrial funds will help reduce the Chinese economy's heavy reliance on indirect financing, or bank loans. The State has been trying to promote direct financing in recent years, including the stock market and bond market.

The State Development and Reform Commission approved the proposal by Tianjin last November to establish the nation's first mutual fund that invests in industrial projects. Many mutual funds have been set up in recent years to invest in the capital market. Tianjin will also experiment with the trading of industrial funds, so that, "through certain markets and trading platforms, (we can) make it become liquid," Pi Qiansheng, chairman of the BNA's Administrative Commission, said without elaborating.

"We are drafting a plan, which will be submitted to the State Council for approval," he added.

Source: China Daily