Singapore's investment arm Temasek Holdings announced on Friday that its total investments in China had amounted to 7.5 billion Singapore dollars, or 35 billion yuan, underlining its determination to strengthen its foothold in Asia's most dynamic market.

"Temasek is now placing great importance on Asia and investment in China is an essential part of its business," Ms. Cheo Hock Kuan, Temasek's Senior Managing Director and Chief Representative for China told Xinhua on Friday.

Temasek has bolstered its presence in many Chinese industries, including the banking and financial sector, energy and resources, transport and logistics, telecoms and media, pharmacy and health care.

Ms. Cheo said Temasek is keen to invest in State-owned enterprises (SOEs) or other large companies that serve as broad-based proxies for the economic transformation in China.

"Temasek is also interested in investing in promising and fast growing businesses, particularly those that meet the growing consumer demands, or facilitate the increasing integration of China into the regional and global economy," said Ms. Cheo.

According to Cheo, a new cargo airline venture between Temasek, Singapore Airlines Cargo and China Great Wall Industry Corp plans to begin its operations in the first half of this year. Besides destinations within China, the new cargo airline will also serve destinations in the United States, Europe, North East Asia and South West Asia.

Cheo believes the new cargo airline will promote China's integration into the global economy.

Temasek's biggest investment in China is in the banking sector. Investment Managing Director Frank Tang told Xinhua that Temasek reinforced cooperation with China's banks last year through its wholly owned Asia Financial Holdings (AFH).

According to Tang, AFH has just completed a five percent stake purchase in the Bank of China (BOC) for 1.5 billion US dollars, though Temasek originally hoped the stake could be 10 percent. But it will try to invest an additional 1 million dollars in BOC's initial public offering (IPO).

Prior to this, AFH acquired a five percent stake in China Minsheng Banking Corp Ltd in January last year and purchased a 5.1 percent stake in another big Chinese state commercial bank - China Construction Bank last August.

Tang said China's banking reforms offer a good opportunity for Temasek to enter China. Temasek is confident for the future growth of financial industry in China as well as the whole of Asia, and believes it can create sustainable value for its shareholders.

"Temasek hopes, as an active investor and a responsible long-term shareholder, to add value to China's banks' efforts to achieve sustainable growth on a robust risk management and governance platform," said Tang.

Senior Financial Economist with the Asian Development Bank Zhang Xuechun said China has been recognized as one of the fastest-growing economies in the world which enjoys a high return-rate for investors.

In addition, the Chinese banking authority is taking an active attitude towards inviting overseas investors as it is opening the banking sector soon, which creates an favorable environment for Temasek to focus its investment in the Chinese market, said Zhang.

In order to strengthen the connection with more Chinese companies, Temasek established the Temasek Beijing Representative Office in 2004. Then it opened an office in Hong Kong last Year. Temasek also plans to open an office in Shanghai in the first half of this year.

"We are confident in China's long-term prospects," said Cheo. "As Chinese enterprises seek further growth, we will look for opportunities to partner them in their expansion to become regional and global champions."

Temasek now manages a diversified global portfolio worth 103 billion Singapore dollars. In the next decade, Temasek said it expects to see about one third of its operating asset exposure in Singapore, another third in the rest of Asia.

According to Cheo, Temasek is now working with China's State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) on China's SOEs reform.

China hopes to learn from Temasek's experience in corporate management, said sources with the SASAC.

Both sides established a working group earlier last year headed by Cheo and SASAC Vice Director Wang Yong.

A three-week SASAC-Temasek Directors Forum was held last August, with over 170 participants from China's SOEs and SASAC discussing board-related topics with various Temasek-linked companies and their board members, said Cheo.

The Chairman of Temasek Holdings, Dhanabalan described Temasek's journey as that "Like China, we too have crossed many rivers of change and transformation by feeling the stones on the way."

"We know we have many more rivers to cross in the journey ahead to transform lives and build a future through successful enterprise," he said.

(Xinhua News Agency March 4, 2006)