The independent directors are former finance minister Liu Zhongli, and Wang Chunzheng, deputy head of the National Development and Reform Commission (NDRC), China's top economic planner.

China is establishing the fund in an effort to increase the investment returns on its mounting foreign exchange reserves, which reached nearly $1.4 trillion at the end of July.

The Standing Committee of the National People's Congress, China's top legislature, in June approved the issuance of 1.55 trillion yuan in special treasury bonds to fund the new agency.

Will it Help?

The Chinese Government might have run out of ideas to rein in wild housing prices. In its latest effort, the central bank has required buyers of second residential homes make minimum down payments of 40 percent, up 10-20 percentage points from the original 20-30 percent.

The minimum deposit for an apartment of more than 90 square meters is currently 30 percent while for apartments less than 90 square meters the minimum is 20 percent.

The central bank also increased the interest rate on mortgage loans for second residential properties to no less than 1.1 times the benchmark one-year lending rate.

The current five-year and above lending rate now stands at 7.83 percent after the central bank raised it for the fifth time this year on September 13. After the adjustment, the rate could reach as high as 8.61 percent.

The move is an attempt to curb rising housing prices and speculation in the property market. It is generally believed that second homes are usually used for investment rather than residential purposes.

Property prices in 70 major cities jumped 8.2 percent in August from a year earlier after gaining 7.5 percent in July, according to NDRC figures.

Experts expected a stricter package of policies to curb speculation and worried the effect of this down payment proportion raise was more psychological than feasible. Chen Deqiang, professor with Chongqing University, argued that in recent years, the government's attitude toward the property market has been mild and has never been meant to temper the industry, largely because the property industry has far-reaching impacts on national economic development. "Many of the controlling policies such as interest rate hikes only have a psychological impact," said Chen.

Industrial Profits Soar

China's industrial firms reported 1.56 trillion yuan of profits in the first eight months of this year, up 37 percent from the same period of last year, according to the National Bureau of Statistics (NBS).

Profits of state-owned enterprises rose 31 percent to 680.1 billion yuan, while collective and foreign-funded enterprises reaped 39.3 billion and 418.4 billion yuan respectively.

Profits of private enterprises hit 260 billion yuan, up 48.5 percent compared with the same period last year.

The booming growth was primarily driven by soaring profits in sectors such as steel, building materials, and transport equipment, according to the NBS.

Steel firms saw their profits rise 58.9 percent from last year, profits of building material companies surged 64 percent and that of transport equipment makers jumped 66.5 percent.

However, profits of oil and gas exploiters reported a 16.2 percent drop in profits in the eight-month period. (See graph)

Leading the Charge

Foreign and private investors now contribute more than half of China's industrial output, the NBS revealed on September 27.

Relaxed ownership rules in the manufacturing sector have led to foreign and private factories contributing 53 percent of last year's industrial revenue, according to the NBS, up from 41 percent in 2002.

Industrial companies with foreign ownership accounted for 31.5 percent of China's industrial revenue in 2006, up from 29.3 percent in 2002.

Measures to encourage the development of the private economy in recent years have seen private firms' industrial output increase at a faster pace. Private companies' contributions to China's industrial output increased from 10.7 percent in 2002 to 21.2 percent in 2006.

But the NBS report showed that State-owned enterprises (SOEs) still play an important role in the sectors that are important to the country's economic security. For example, SOEs accounted for nearly 99 percent of economic output in the oil and natural gas exploration sectors, and the figure is 90 percent for the electricity industry.

The State-owned Assets Supervision and Administration Commission plans to cut the number of major companies under its control down to between 80 and 100, from the current crop of 155, by 2010.

Numbers of the Week 400 billion yuan The value of China's social security fund reached 400 billion yuan by the end of June this year, according to China's National Council for Social Security Fund. The security fund reported a profit rate of 15.2 percent in the first half of 2007, still insufficient when compared to the country's population of 1.3 trillion. 66.58 billion yuan China Shenhua Energy, the country's largest coal producer, raised 66.58 billion yuan from its Shanghai A-share market initial public offering, the largest domestic offering ever.