China is considering using part of its huge foreign exchange reserves to help state oil companies explore for overseas resources, according to reports.

The Shanghai-based National Business Daily said the national energy working conference, which closed earlier this month, had discussed the proposal.

According to the proposal, Beijing would use a slice of China's $1.95 trillion yuan ($285.9 billion) in foreign exchange reserves to set up a special fund to finance offshore oil exploration.

China's foreign exchange holdings are heavily invested in dollar-denominated assets, and Chinese researchers and officials are calling for a more diversified use of the reserves.

Fan Wenzhong, a state-owned assets supervision official in Chongqing city, said in an interview with the Shanghai Securities News published on Monday that the government should use its reserves to set up a $200 billion overseas industrial fund and a $100 billion "social development" fund.

Source: Upstream