China will establish an agency modeled on Singapore's Temasek Holdings Pte to manage part of its US$1 trillion-plus in foreign-currency reserves.

"The government has decided to separate the ownership of the reserves and the management of the reserves into two agencies," Finance Minister Jin Renqing said yesterday.

His comments came at a wide-ranging Beijing press conference held on the sidelines of the annual session of the National People's Congress.

China is the world's biggest forex holder and "the effective management of this vital resource is a crucial task," Jin said.

The State Administration of Foreign Exchange will run the daily operation of the country's forex reserves, while the new forex investment company, under the State Council, will run the investment side, he said.

Lou Jiwei, promoted to the post of deputy secretary of China's Cabinet three days ago, will head the new government agency to manage part of the currency reserves.

Lou, a vice minister of finance for nine years, is expected to oversee about US$200 billion. The Central Huijin Investment Co, an affiliate of the People's Bank of China, may be reorganized and then merged with the new investment entity.

Jin also made it clear that the state is not in favor of local government practices of profiting from land-rights sales and building "image projects."

He said the central government has issued rules that order local governments to set aside a part of the income they earn from land sales to construct budget housing.

In China, land-use rights are usually acquired from farmers for a small amount and provincial governments can grab the lion's share of profits, even if they onsell to overseas investors at undervalued prices.

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