China seen likely to diversify reserve investment toward alternative assets

China is re-considering investment policy for its giant near-$2tr reserves in the wake of the financial crisis, and is likely to increasingly diversify into alternative and fixed assets including European real estate, says a 12-year veteran of the National Peoples Congress. Wilfred Wong, China MD of the Pacific Star investment fund group, says the crisis, and especially US economic woes, has brought a change of attitude to China's hitherto narrow focus on Treasury securities. Asked if they will diversify into European property, Wong told a media briefing: "Not yet but this is going to come." He recently suggested to Beijing officials that fixed assets be included among investment classes. "They were very nervous about doing this because they do not have the machinery," he said. "But now a lot of state-run funds are restructuring; they have just allocated $800m to Morgan Stanley to invest in real estate and are beginning to look at alternative investments."