China's wealth fund funds China's bank

BEIJING, Dec. 31 (UPI) -- China's wealth fund, with high-profile stakes in Blackstone Group and Morgan Stanley in the United States, has pumped $20 billion into China Development Bank.

While the fund, China Investment Corp., has captured headlines from its overseas ventures, it has begun setting aside as much money for recapitalizing domestic financial institutions as it has allocated for investment beyond China's borders, The Wall Street Journal reported Monday.

China Development Bank has specialized in supporting domestic infrastructure projects and is a vanguard in developing China's budding bond markets.

Plans for the injection into CDB have been in the works since early 2007. China already dipped into its foreign exchange reserves to buoy the books of the country's three biggest listed banks before their initial public offerings, the Journal said. Investments into the banks from Central Huijin Investment Co., a government agency now incorporated into CIC, totaled about $60 billion.

China's central bank said on its Web site the cash infusion will "increase China Development Bank's capital adequacy ratio, strengthen its ability to prevent risk and help its bank move toward completely commercialized operations."