BEIJING, April 7 (Xinhua) -- Despite its huge foreign reserves, China will continue to borrow "a moderate amount" of money from international finance corporations every year, said an official with the National Development and Reform Commission (NDRC).

China will use international commercial loans in a rational and prudent way, NDRC vice chairman Zhang Xiaoqiang said.

A report released by the NDRC and the Asian Development Bank said China would need loans of three billion U.S. dollars every year in the coming decade.

The report proposed that eighty percent of the money be used to support the development of the central and western areas as well as the old industrial bases in the northeastern areas.

Zhang said the country would improve the quality and efficiency of using the loans.

Analysts say the country can use the loans not only to balance regional development but also to reduce excessive fluidity through the financial leverage.

Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, said last week that China needs to retain around 650 billion U.S. dollars of foreign reserves.

Cheng said 450 billion dollars should be earmarked as strategic reserves and a further 200 billion should be held to provide security for Chinese enterprises investing overseas and for individuals, because the Chinese currency is not freely convertible.

To ensure continued growth in the value of the nation's foreign exchanges, the country plans to establish a state foreign exchange investment company which may invest about 200 billion dollars of China's foreign exchange reserves.

China's foreign exchange reserves, which reached 1.066 trillion U.S. dollars at the end of 2006, have grown by more than 200 billion dollars annually in recent years.