The sovereign wealth fund (SWF) is very beneficial to the development of global investment and the economy, Chinese Finance Minister Xie Xuren said on Tuesday.

"The sovereign wealth fund is a very important part of the cycle of savings reinvestment. It is very important in mobilizing savings, increasing investment, allocating resources effectively and improving the structure of resources," Minister Xie said at a news briefing held during the ongoing 4th US-China Strategic Economic Dialogue (SED) in Annapolis, Maryland.

Xie said the SWF is engaged in long-term investment rather than short-term speculation and therefore it is very beneficial to global investment and the development of the economy.

"It will not cause a significant impact on the financial markets," he added.

China has its own SWF, the China Investment Corporation (CIC), which is responsible for the investment of foreign currencies in China, he said. The CIC was established in accordance with the corporate law in China and operates according to commercial rules, Xie said.

"It (CIC) has increased transparency according to regulations and practices in the world, so its investment has been warmly welcomed by other countries," the minister said.

In order to further improve the management of SWF, it is necessary to work out some rules or regulations, he said. But the minister stressed that the development of such rules or regulations should have the participation of all countries concerned.

The SED, a dialogue mechanism initiated by Chinese President Hu Jintao and his US counterpart George W. Bush in 2006, is held twice a year in China and the United States on a rotating basis. The last dialogue was held in Beijing, China in December.

(Xinhua News Agency June 19, 2008)