China Higher and Mightier

China is putting its surplus billions to work, in what is effectively the official state hedge fund. Beijing is set to inject some $200 billion into a new sovereign-wealth fund for investment abroad in assets including stocks, real estate and commodities—anything that earns the government greater returns than the money its central bank has parked in U.S. Treasury bills. And that's just the opening gambit. Stephen Green, chief economist for Standard Chartered Bank in Shanghai, expects China to channel an additional $100 billion or more into the fund in 2008, with further infusions if all goes well in year one. Initially, he says, in-house fund managers will tread softly. "[But] once they feel they have the hang of it, they'll get more adventurous. At this point it's toes in the water."