China's foreign reserves, already the world's largest, have risen past US$1.2 trillion (euro890 billion), a state news agency said Thursday, amid surging trade and plans to create a multibillion-dollar government agency to invest some of the stockpile.

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The figure, as of the end of March, represented a 37.4 percent rise over the same period last year, the Xinhua News Agency said, citing the central bank.

China's reserves have risen rapidly as a trade- and investment-fueled influx of money forces Beijing to drain billions of dollars from the economy every month through bond sales to hold down pressure for prices to rise. That money is stockpiled in US Treasury notes and other foreign assets.

The government announced last month it is creating a multibillion-dollar agency to invest a portion of the reserves in hopes of making more profitable use of the money.

No details of the fund's size, when it will be launched or how it will make investment have been released. But economists have speculated that Beijing might allocate as much as US$200 billion-US$400 billion to it.

Japan's reserves are the world's second-largest at US$909 billion as of the end of March.

The composition of China's foreign currency reserves is a secret. But economists believe that as much as 75 percent is believed to be in US dollar-denominated instruments, mostly Treasuries, with the rest in euros and a small amount in yen.