The investment arm of China's social security fund will break performance records this year, a senior official predicted on Tuesday.

National Social Security Council deputy director-general Wang Zhongmin said the 230-billion-yuan investment fund run by the council would achieve a yield of no less than five percent this year, up almost two percentage points on last year.

Wang said the optimistic projection was based on the robust performance of the local securities market and the "handsome return" from investment in the Bank of China and the Industrial and Commercial Bank of China.

The investment fund achieved an aggregated yield of 11.82 percent from 2000 to 2004.

"The figure beats the inflation rate but still falls short of the 13.66-percent interest rate of five-year treasury bonds," Wang said.

The Council on Monday took a new step when it signed overseas investment partnerships with two global investment trustees, Northern Trust Corporation and Citigroup Inc., both from the Unites States.

Wang said the initial overseas investment will be around one billion U.S. dollars in both stocks and bonds.

Under the interim regulations, overseas investment should represent no more than 20 percent of the total managed by the council, which translates into an upper limit for overseas investment of about 46 billion yuan (about 5.5 billion U.S. dollars).

"The world average yield will be the benchmark for our overseas investment, " Wang said, adding "We aim to beat the benchmark."

The council's investment portfolio represents less than 10 percent of China's total social security fund, which is about 2.68 trillion yuan.