China's legislature approves 1.55 trillion yuan of treasury bonds to buy forex

China's legislature on Friday adopted a motion that authorizes the Ministry of Finance to issue 1.55 trillion yuan of special treasury bonds for purchasing foreign exchange.

The legislature also approved the raise of the annual ceiling on treasury bond issuance for 2007 to 5.34 trillion yuan.

The motion was adopted at the ongoing 28th session of the Standing Committee of the National People's Congress.

The bonds will be used to purchase 200 billion U.S. dollars entrusted to the nation's new foreign exchange investment company as operating capital.

The special treasury bonds will be issued in the form of negotiable book-entry T-bonds with a term of more than ten years. The coupon rate will be decided by the market, according to the motion.

At the same time, a "central finance forex management fund" will be established to examine the revenue and expenditure of the special treasury bonds and forex assets, said the motion.

Statistics show that by the end of March 2007, China's forex reserves had reached 1.202 trillion US dollars, up 135.7 billion US dollars from the end of 2006.

Source: Xinhua