China launched Saturday a long-anticipated state-owned investment company that is intended to manage around 200 billion dollars, or nearly one sixth of the nation`s massive foreign exchange reserves. The China Investment Corp. will be headed by Lou Jiwei, a former vice finance minister, according to a statement issued by the new company, which took pains to stress the company`s independence from government interference. "The company will operate based on the principle of separating management and government," said the statement issued at the grand opening in Beijing`s recently erected New Poly Plaza. "The company will function independently and based on commercial principles," it said. The statement seemed to be aimed at concerns, voiced overseas, about the exact nature of the new organisation, and whether, for example, it would be used to help satisfy the nation`s enormous thirst for energy and natural resources. "The company will contribute funds. It`s not a bad thing," said Zhang Taowei, a finance professor at Beijing`s Tsinghua University. "If the Americans are concerned about this, it`s because they`re still stuck in Cold War thinking." The company, which will be in charge of the largest fund of its kind anywhere in the world, emerges at a time when China, long a magnet for foreign investment, is surfacing as a major source of capital in its own right. China`s reserves, the world`s largest, surpassed 1.33 trillion dollars at the end of June, boosted by the nation`s ballooning trade deficit. About 70 percent has generally been believed to be held in US dollar denominated paper, principally US government bonds. This has proved a less-than-ideal solution, given not just the low yields on government debt, but also the weakening of the US currency. The company will try to maximize the proceeds via long-term investments "within a range of acceptable risks," according to unnamed sources quoted by state-run Xinhua news agency. He Fan, an economist at the Chinese Academy of Social Sciences, a Beijing-based government think tank, confirmed the company would mark a departure from the past investment focus on US Treasury bills. "It will be very different with the state investment company. There may be equity investment, government bonds of other countries, strategic commodities and technologies," he told AFP. Even before its official launch, the company created headlines across the globe in May by investing three billion dollars in US private equity group Blackstone. However, analysts said high-profile acquisitions of this type will not constitute the majority of the new company`s business. "Compared with the past, the investment will be longer-term and the scope wider," said He. "But investment in private equity firms like Blackstone, which involves higher risks, is unlikely to account for a large proportion in its portfolio."