Home Business Politics Life Culture��Edu Sci��Tech Sports Photos
��Search
China Observer
�� Judging China's "monetary" future
�� How much of Chinese New Year's flavor can be passed on?
�� China eyes balanced economic development
Photos
�� Training during snowfall in Beijing
�� Lanterns Festival approaching
�� Dining at a toilet restaurant
��Home>>Business
Forex reserves should be cut by half: Chinese banker
www.chinanews.cn 2006-02-08 09:56:12
(Source: Shenzhen Daily/Agencies)
BEIJING, Feb. 8 - The government should ideally cut its foreign exchange
reserves by half at the end of last year, to help ward off risk and ease
upward pressure on the yuan, a Bank of China official was quoted as
saying yesterday.
China's foreign exchange reserves swelled 34 percent in 2005 to a record
US$818.9 billion, signaling upward pressure on the yuan despite July's
revaluation, setting off calls by some Chinese economists to find ways to
slow down the growth.
"China's foreign exchange reserves should roughly be kept at a level
between US$300 billion and US$400 billion, which will be appropriate,"
the Financial News quoted Wang Yuanlong, a director at Bank of China's
Australian operations and former economist at the bank, as saying.
"China should use its interest rate policy and exchange rate policy to
adjust the foreign exchange reserves," Wang said.
Wang said China needed adequate foreign exchange reserves to fend off
risk as it was in transition between a planned and market-driven economy,
but the current level of reserves had far exceeded conventional prudence.
The soaring reserves made it hard for the central bank to control money
supply, while it faced an "opportunity cost" as the chunk of the reserves
had been invested in U.S. Treasuries, which usually yielded less than
foreign investment in China, he said.
China should also "reasonably choose currency structure and asset
structure for its foreign exchange reserves," Wang said.
China's reserves, which will soon surpass those of Japan as the world's
highest, are enough to repay its entire foreign debt and still buy 10
months' worth of imports.
Copyright� 2004 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.
Disclaimer: viewpoints in the website do not represent China News Service
Learn Chinese, Chinese Online Class, Learning Materials, Mandarin audio lessons, Chinese writing lessons, Chinese vocabulary lists, About chinese characters, News in Chinese, Go to China, Travel to China, Study in China, Teach in China, Dictionaries, Learn Chinese Painting, Your name in Chinese, Chinese calligraphy, Chinese songs, Chinese proverbs, Chinese poetry, Chinese tattoo, Beijing 2008 Olympics, Mandarin Phrasebook, Chinese editor, Pinyin editor, China Travel, Travel to Beijing, Travel to Tibet
