China May Invest in U.S. Infrastructure

China says the U.S. government should make its policies on foreign investment more transparent.

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BEIJING, Dec 2 (Reuters) — China may channel part of its huge pool of foreign exchange reserves into investment in U.S. infrastructure, including rail and transportation networks, Commerce Minister Chen Deming said on Friday.

"China is unwilling to take on too much U.S. government debt. We are willing to turn that money into investment," he told U.S. Ambassador to China Gary Locke and U.S. businessmen.

Chen did not elaborate on how China might channel some of the country's war chest of $3.2 trillion foreign currency reserves to invest in U.S. infrastructure, such as rail and transportation systems.

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"U.S. infrastructure in some areas needs rebuilding, for example its electricity grid, railways and transportation networks," he said.

"This type of investment, even more, can help resolve the unemployment issue in the United States," he added.

Analysts believe about 70 percent of China's currency reserves have been invested in dollar-denominated assets, including Treasuries, despite Beijing's gradual efforts to diversify away from the dollar.

They don't expect China to dump its holding of U.S. Treasuries for fear that such a move could hurt the U.S. fragile economic recovery, which in turn undermine China's growth.

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Chen said the U.S. government should make its policies on foreign investment more transparent.

In return, Locke said "we can and we must facilitate more Chinese investment into the United States."

Other Chinese officials have also expressed interest in boosting investment in infrastructure in Western countries.

China is keen to invest in the ailing infrastructure of Western countries, especially Britain, the chairman and chief executive of the Asian country's sovereign wealth fund wrote in the Financial Times.

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China will expand imports from the United States next year, Chen said, reiterating hits calls for Washington to relax its restrictions on high-tech exports to China.

Beijing complains that those high-tech restrictions, imposed for security reasons, hold back purchases of U.S. goods that could narrow the trade gap, a claim rejected by Washington.

Chen said Beijing is taking seriously U.S. concerns about China's protection of intellectual property rights and its government procurement policies.