MNI EXCLUSIVE: China Could Use Forex For One Belt: Ex-Official

--GDP Growth Could Be 6.6% For 2018 With Fiscal Stimulus; 6.5% In 2019 

     BEIJING (MNI) - China will continue to diversify its foreign exchange

reserves out of dollars, increasing its long-term investments in the One Belt

and One Road Initiative (OBOR), a former senior People's Bank of China official

told MNI.

     "We have made many supportive moves, including Silk Road Funds and the

Asian Infrastructure Investment Bank (AIIB), for long-term investment in

projects in countries alongside the OBOR," said Wei Benhua, former deputy

administrator-in-bureau at the State Administration of Foreign Exchange, the

PBOC's forex regulator.

     Official data shows China expects to invest $50 billion in the AIIB and $40

billion and CNY100 billion into Silk Road Funds, still small compared to the

country's $3.1 trillion in reserves. The One Belt and One Road Initiative is a

sweeping development plan aimed at promoting infrastructure development and

Chinese investment along trade routes across Asia, Europe and Africa.

     Over 60% of China's forex reserves are currently invested in U.S

Treasuries, according to Wei.

     --UPBEAT OUTLOOK

     Wei was upbeat about China's economic performance despite the impact of its

trade spat with the U.S., saying fiscal stimulus and other policy moves could

still allow 6.6% GDP growth this year and 6.5% in 2019.

     Some economists believe China's economy could slow in 2018, maybe falling

just short of the 6.5% annual growth level.

     "Our infrastructure still falls behind that of advanced countries, so we

need to further invest in the sector," said Wei, also a former director of the

PBOC's International Department, noting that "cost and efficiency should be

considered in the process".

     Wei said China is acting to offset the effects of the trade dispute,

including measures to boost domestic consumption. "China has a huge domestic

market, so we could enhance supply-side reform and boost domestic demands," Wei

stressed.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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