BEIJING, Nov 7, 2007 (AFP) -- China vowed on Wednesday that it would try to avoid shaking up the global financial system when its unleashes its massive and highly anticipated new investment vehicle onto world markets.

Chinese vice-minister of finance Li Yong said two-thirds of the 200-billion-dollar China Investment Corporation (CIC) would be invested domestically.

That leaves another roughly 67 billion dollars whose precise destination he did not divulge, but Li said at a financial conference in Beijing that the money would be invested "gradually and cautiously."

The financial products the money will be invested in have not been specified.

He added in comments later quoted by the state-run Xinhua news agency that the fund would not buy into overseas airline, telecommunications or oil companies.

"The CIC will want to make things more transparent, and learn best practices from other sovereign wealth funds," he said.

The emergence of the world's largest investment fund, officially launched in September, has set alarm bells ringing over its potential impact on world markets. China has given few details about its investment plans.

But Li did say that about one-third would be used to inject funds into the Agricultural Bank of China and the China Development Bank.

It has already been announced that another third would be used to buy Central Huijin Investment, a holding company under the central bank.

The CIC is tasked with diversifying and maximising returns on part of China's huge, 1.4-trillion-dollar foreign exchange hoard, most of which is in relatively safe but low-yielding US-dollar assets such as Treasury bonds.

In May, long before the official launch, the fund surprised many by investing three billion dollars for 10 percent of US private equity group Blackstone, triggering worries it would move aggressively.

However, many analysts believe the Blackstone deal will prove atypical and that the fund will seek low-key, minority shareholdings in listed companies.