China may purchase up to US$50 billion in IMF bonds

"If the IMF bonds meet our requirements in terms of safety and return on investment, we will actively consider buying up to US$50 billion of bonds," an unnamed official said, according to the Xinhua news agency.

"China has consistently worked to further the Fund's attempts to boost its financing via the market," said the official from China's State Administration of Foreign Exchange.

The 185-nation IMF is struggling to provide financing to countries in trouble amid the global financial and economic crisis.

It has been working to issue its very first bonds, and major developing economies such as Brazil, Russia, India and China -- known collectively as the BRIC countries -- are seen as potential buyers.

The IMF said last week that Russia intended to buy up to US$10 billion in the multilateral institution's bonds.

China's forex reserves are the largest in the world and currently stand at about US$1.9 trillion.

"China may actually have wanted to buy even more but the IMF did not necessarily want China to buy more at this stage," said Chen Xingdong, chief China economist with BNP Paribas in Beijing.

It had been rumored for several months that China could make a major contribution to the IMF.

In April, British Prime Minister Gordon Brown told reporters that China had pledged US$40 billion to international financial institutions, Xinhua reported earlier.

Brown at the same time also said that China deserved greater influence at the IMF.

Any bid by China to expand its formal influence at the IMF is likely to encounter resistance, especially from Europe, which has traditionally supplied the fund's director general.

Buying a substantial amount of bonds could be the first step on the way towards expanding China's clout at the IMF, according to observers.

Meanwhile, East Asia's other giant, Japan, with one trillion U.S. dollars in forex reserves, has also boosted its support of the IMF.

Japan signed an agreement in February on the terms of a loan of up to US$100 billion to the IMF to provide financial lifelines to crisis-hit emerging countries.

Japanese Prime Minister Taro Aso had announced in November last year that Japan was prepared to provide supplementary funding to the IMF to help contain the current global crisis.

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