SHANGHAI, May 19 (AP) -- A new company being set up by China to invest some of its foreign exchange reserves has entrusted US$3 billion to U.S. private-equity company Blackstone Group, the China Business News reported Friday, citing an unnamed source.

The funds given to Blackstone are for offshore investments, the newspaper said.

The Chinese government said in March that it will create a multibillion-dollar company to invest a portion of its US$1.2 trillion in reserves, largely invested in U.S. Treasuries, in hopes of making more profitable use of the money. While authorites have not revealed details about the new company's size, economists say Beijing might allocate as much as US$200-400 billion to the venture.

Central Huijin Investment Co., a state agency that has invested some of China's foreign exchange reserves to recaptilize domestic financial companies, loaned the US$3 billion to the new investment agency, the paper reported. The new agency will settle the loan once it is officially set up, the paper said.

Officials at Blackstone and Huijin weren't immediately available for comment.