CHINA / National
China to halt accumulating foreign reserves
(Reuters)
Updated: 2007-03-21 09:19
GUATEMALA CITY - China will stop stockpiling its massive foreign exchange
reserves, China's central bank governor Zhou Xiaochuan said in an
interview published Tuesday.
"Many people say that foreign exchange reserves in China are [already]
large enough," Zhou told the Emerging Markets magazine, whose latest
issue was released at a meeting of the Inter-American Development Bank in
Guatemala.
"We do not intend to go further and accumulate reserves," Zhou said,
adding the government will "cut a small piece of reserves" for a new
agency to be set up for the management of its massive foreign reserves,
which have swollen because of the trade surplus.
He did not say how much money would be passed to the agency.
China's premier, Wen Jiabao, said last week that plans to form a new
agency to invest part of the country's swollen foreign exchange reserves,
the world's biggest at more than $1 trillion, would not have an adverse
impact on the U.S. dollar.
China's central bank also said last week it would not significantly
adjust the composition of those reserves. A large part of them are
denominated in dollars.
As the reserves have ballooned on the back of China's record trade
surpluses, demands have grown for part of the hoard to be invested more
aggressively.
Investors have long fretted over Beijing's plans to diversify its foreign
exchange investments because of their potential impact on global markets.
Studies have shown investment by China and other Asian countries in U.S.
bonds has reduced long-term American interest rates by as much as 2
percentage points.
The state of Chinese trade affects such companies as IBM, Wal-Mart and
HSBC.
Top China News
· China to halt accumulating foreign reserves
· Experts dismiss claim Shanghai will drown by 2050
· Japan, China scholars to engage in history disputes
· Official plays down bubble fear in stock market
· President vows to improve strategic ties with France
Today's Top News
· Four overseas banks ready for renminbi business
· Measure adopted to cool stock market
· 2 Chinese workers kidnapped in Nigeria
· Houses cheaper than cars in Detroit
· N. Korea talks stall over frozen funds
Most Commented/Read Stories in 48 Hours
