BEIJING (MNI) - The Chinese government is considering lending out part of the country's vast foreign exchange reserves to other countries in exchange for crude oil, the Century Weekly magazine reported, citing sources close to the foreign exchange regulator.

The magazine, run by an editorial team which previously wrote for the Caijing magazine, said the idea originated in late-2009 after China signed a deal with Russia under which China would lend $25 billion to Russia in return for 15 million tonnes of crude oil imports.

The State Administration of Foreign Exchange has been assigned by the State Council to lead the study into the lending project and SAFE has hired China Development Bank to arrange the loan, according to the report.

China holds the world's largest foreign exchange reserves, at $2.447 trillion at the end of March 2010, up from $2.399 trillion at the end of 2009.

Beijing has long been under pressure to invest the country's foreign exchange reserves. AS part of that, it set up the China Investment Corp. in September 2007 to diversify foreign exchange reserve investment. CIC has some $200 billion under its management.

beijing@marketnews.com ** Market News International Beijing Newsroom: 86-10-5864-5274 **