China is sitting on a pile of foreign exchange reserves

Speaking at the Communist Party congress, where the China Investment Corporation was launched, Lou Jiwei said it would have a global reach.

The body currently has about $200bn (�98bn) at its disposal to spend.

So-called sovereign wealth funds have been criticised for straying into politically sensitive areas.

Political unease

The investment arms of Singapore, Qatar, the United Arab Emirates and Abu Dhabi have all used their huge wealth to buy foreign assets and some governments are concerned that deals could be struck to gain political advantage.

Sovereign wealth funds are a stabilising force in the international market Lou Jiwei, China Investment Corporation chairman

The Canadian government said last month it was reviewing its foreign takeover rules and may insert a "national security test" for would-be foreign buyers.

The US, meanwhile, wants clearer guidelines and disclosure rules applied to such funds.

But Mr Lou said his fund's activities would be transparent and its investments would be dictated by commercial not political factors.

"Sovereign wealth funds are a stabilising force in the international market," he said.

"The pressure on us is very great and so is the responsibility."

China has the world's largest horde of foreign exchange reserves, totalling about $1.43 trillion in value. About 70% of these funds are estimated to be in dollar-denominated assets.

Backlash warning

Mr Lou said there were "no restrictions" on where the fund would invest

But he denied reports that it had already built a stake in the operator of the Hong Kong stock exchange, including Taiwan and Hong Kong.

Before it was officially launched, the fund spent $3bn buying a stake in US private equity firm Blackstone.

The combined value of global sovereign funds could rise from their current $2.2 trillion to $13.4 trillion in the next decade, banking group Standard Chartered said in a recent report.

But it warned of the risk of a "protectionist backlash" against such funds unless clearer rules were put in place governing their activities.