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State Administration of Foreign Exchange
Guójiā wàihuì guǎnlǐ jú
Agency overview
Formed 1978
Jurisdiction People's Republic of China
Headquarters Beijing
Agency executive Yi Gang
Parent agency People's Bank of China

The State Administration of Foreign Exchange (simplified Chinese: 国家外汇管理局pinyin: Guójiā wàihuì guǎnlǐ jú) of the People's Republic of China is an administrative agency tasked with drafting rules and regulations governing foreign exchange market activities, and managing the state foreign exchange reserves, which at the end of June 2009 stood at $2.13 trillion for the People's Bank of China. The current director is Yi Gang.[1]



SAFE's existence and role were initially closely guarded secrets, its subsidiaries were minor, but the funds under management have increased significantly in recent years. They were responsible for running SAFE's portfolio across the various time zones, replicating the investments of head office in Beijing.[2]

It controlled Central Huijin Investment Company, but in September 2007, it ceded control to the new formed sovereign wealth fund, China Investment Corporation.

With the burgeoning of China's reserves and amidst increasing rivalry between state agencies, there are signs of growing independence of and competition between the subsidiaries.[2]


The current Administrator of SAFE is Yi Gang. Deng Xianhong, Fang Shangpu, Wang Xiaoyi, Li Chao are Deputy Administrators.[3]


  • SAFE Head Office
    • General Affairs Department (Policy and Regulation Department)
    • Balance of Payments Department
    • Current Account Management Department
    • Capital Account Management Department
    • Supervision and Inspection Department
    • Reserves Management Department
    • Human Resources Department (Internal Auditing Department)
    • Science and Technology Department

Institutions affiliated with the SAFE

    • Central Foreign Exchange Business Center
    • Information Center
    • General Services Center
    • Editorial Office of the Foreign Exchange of China journal.



The magnitude of China's reserves is disclosed, but not its composition. At the end of 2006, approximately 70% of the reserves were in U.S. dollar assets, 20% in euros and 10% in other currencies, according to economist Brad Setser. Most of China's currency reserves are invested in high grade U.S.-dollar-denominated debt, such as U.S. Treasuries, though as early as 2007 it was estimated that SAFE held $100 billion worth of U.S. mortgage-backed securities, hoping to achieve higher returns than those on U.S. Treasuries.[4]

"The Hong Kong subsidiary is notably taking more risk in managing reserves," according to an informed source.[2] The Financial Times reported on 4 January 2008 that the Hong Kong branch had bought stakes of less than 1 percent in both Commonwealth Bank of Australia and Australia and New Zealand Banking Group, respectively Australia's second and third-biggest lender by assets, over the preceding two months. The ANZ purchase has been confirmed by the bank.[5] SAFE also invested in BP[6] and Total[7] in April 2008.


2008 diversification and losses

As the reserves continue to grow, the central bank is aiming to boost investment returns on its foreign-exchange holdings by making somewhat riskier but higher-yielding investments. Pronouncements of Chinese officials are consequently closely scrutinised;[8] each trade is reportedly up to US$1 billion.[2] As part of diversification in 2008, SAFE acquired small stakes in dozens of companies including Rio Tinto, Royal Dutch Shell, BP, Barclays, Tesco and RBS.[9]

Brad Setser, speaking in March 2009 said losses as a result of this diversification at the peak of the market "would exceed US$80bn."[9]

Brad Setser said:"SAFE has built up one of the largest US equity portfolios of any foreign government entity investing abroad, including the major sovereign wealth funds....It appears SAFE began diversifying into equities early in 2007 and, rather than being deterred by the subprime crisis, it continued to buy."[10]

2009 investment policy

On March 23 2009, deputy governor of China's central bank, Hu Xiaolian told reporter:""China will continue investing in U.S. government bonds while paying close attention to possible fluctuations in the value of those assets.... Investing in U.S. Treasury bonds is an important component of China's foreign currency reserve investments,[11]


SAFE has branches and offices in all provinces, autonomous regions and municipalities. As of 2005, it had 36 branch offices, 298 central sub-branches and 508 sub-branches.

It has branches in Hong Kong, Singapore, London and New York.[2]

The Hong Kong office (华安公司 SAFE Investment Company Ltd) was set up just in June 1997, before the transfer of sovereignty of Hong Kong, and served an important role in defending the value of the Renminbi and Hong Kong dollar's peg to the US dollar against international speculators. It was a minor outpost for SAFE for several years, with only about $20bn in funds under management.[2]

See also


This article contains Traditional Chinese text. Without proper rendering support, you may see question marks, boxes, or other symbols instead of Chinese characters.
  1. ^
  2. ^ a b c d e f Jamil Anderlini, China investment arm emerges from shadows, Financial Times, 5 January 2008
  3. ^
  4. ^ Bradsher, Keith (2007-03-07). "China's money woe: Where to park it all". International Herald Tribune. Retrieved 2007-03-07.  
  5. ^ Denny Thomas & Jason Subler, Reuters, China forex arm buys stakes in Australian banks, 4 January 2008
  6. ^ "Chinese fund builds up £1bn stake in BP", Telegraph, 2008-04-18,, retrieved 2009-03-25  
  7. ^ McGregor, Richard; Hollinger, Peggy; Sender, Henry (2008-04-03), "China buys 1.6% stake in Total", Financial Times (Beijing, China),, retrieved 2009-03-25  
  8. ^ Browne, Andrew (2006-10-17). "China's Reserves Near Milestone, Underscoring Its Financial Clout". Wall Street Journal: p. A1. Retrieved 2007-03-07.  
  9. ^ a b Anderlini, Jamil (2009-03-15). "China lost billions in diversification drive". Financial Times. Retrieved 2009-03-23.  
  10. ^ "China faces $US80b foreign equity losses". Business Day(Fairfax Digital). 16 March 2009. Retrieved 2009-03-24.  
  11. ^ "Central bank: China to continue investing in U.S. Treasury bonds". Xinhuanet. 23 March 2009. Retrieved 2009-03-24.  

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