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China's move to invest its US$1 trillion in reserves is shaping up as a classic bureaucratic bun-fight.
In what some observers see as a riposte by the Ministry of Finance to the high profile of Zhou Xiaochuan, governor of the People's Bank of China, the central Government is reportedly planning to set up a new investment vehicle run by a Vice-Minister of Finance, Lou Jiwei.
The vehicle is being reviewed at this year's simultaneous National People's Congress and Chinese People's Political Consultative Conference, and is unofficially known as the State Foreign Exchange Investment Company (SFXIC).
Its purpose will be to invest a portion of the more than US$1 trillion in forex reserves the Government has attracted from China's own stellar export performance but also foreign "hot money" betting on a revaluation of the yuan.
Zhou strengthened his position within the bureaucracy when the central bank he heads became the vehicle for recapitalising the state banks ahead of their Hong Kong listings.
The vehicle used was Central Huijin, which has also taken ownership of domestic brokerages in return for bailing them out.
The People's Bank's main advantage was that it controlled the single biggest cash pile in the world. However, Zhou could now have to cede some of that power to the Finance Ministry's investment vehicle, which will initially be receiving up to US$200 billion, followed by US$100 billion each year from the US$200 billion China is now attracting, according to some press reports - nobody really knows.
The tension between the two departments is typified by the simultaneous rumours about Central Huijin setting up its own investment vehicle, the State Investment Company (SIC).
This organ will reportedly be managed by Guo Shuqing, now chairman of the China Construction Bank. Guo, a lifelong banker, has close ties to the People's Bank.
The SIC would be sharing the forex proceeds with the SFXIC and both will be answerable to the State Council, China's equivalent of a parliament.
"Whether having two competing agencies will really improve investment performance is a moot point," commented one foreign observer in Shanghai.
In fact, there will be three organs distributing the foreign exchange, since the State Administration of Foreign Exchange (SAFE) also has a hand in investing the forex reserves. However, the difference is that SAFE is clearly subordinate to the central bank, which directs it how to plough the money into foreign government-linked papers.
SAFE's principal other function is to monitor the balance of payments and examine issues relating to the strength of the currency, as well as oversee the development of a foreign exchange market.
The comparison to Singapore's Temasek often made recently does not bear close scrutiny.
Temasek originally started out as the holding company of the Government's stake in its domestic state-owned enterprises. It is answerable to, but independent of, its shareholder, the Finance Ministry.
In the past few years Temasek has tried to improve its performance by investing abroad. It is part-funded by compulsory contributions from Singapore's population.
In fact, the Chinese entity should more accurately be compared to the Government of Singapore's Investment Corporation, which was set up to handle the city-state's foreign exchange reserves.
But the two Singaporean entities' roles are blurring, with both investing in the Industrial and Commercial Bank of China's IPO in Hong Kong last year.
The division of labour is by no means clear in China either, with different bureaucrats coming out with different versions.
One interpretation is that Lou Jiwei could use the SFXIC to handle the foreign reserves, while Central Huijin under Guo Shuqing would act in the same capacity as Temasek.
However, the comparison doesn't work, since China's version of Temasek already exists, in the shape of the State-owned Asset Supervision and Administration Committee. Central Huijin has much smaller holdings in financial entities only. And anyway, it is interested in getting its hands on the forex reserves, not domestic assets.
Overall, analysts suspect that the long-running saga of the fate of China's currency reserves has not been settled.
Remember that the reserves were originally going to be used to accumulate energy reserves. That plan appears to have been quietly shelved.
Whether the current plan will have any more success remains to be seen.
But what is clear is that the financial markets have been roiled by the moves. Any divestment from the dollar reserves into other asset classes could have catastrophic consequences on the dollar.
Recall the sheer size of China's investments in US treasury bonds: they amount to some US$750 billion, roughly the size of the US current account deficit, or 6 per cent of GDP.
Not long ago, a sell-off in the Chinese stock markets triggered panic around the globe. That's astonishing given the Chinese markets are sealed off from the world.
Giving Chinese bureaucrats US$1 trillion to invest, probably quite eccentrically, around the world could make that kind of volatility look like child's play.
