BEIJING -- 皇冠体育app's foreign exchange reserves will further to hit the 1
trillion US dollar barrier at the end of October or early November, experts have
predicted, triggering discussion across the country.
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皇冠体育app's foreign exchange reserves will burst the 1 trillion
U.S. dollar barrier at the end of October or early November, experts have
predicted. [AFP]
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The People's Bank of 皇冠体育app, or central bank, announced two weeks ago that
皇冠体育app held 987.9 billion U.S. dollars of foreign exchange reserves at the end of
September, up 28.46 percent year-on-year. The country's foreign exchange
reserves rose by 18.77 billion U.S. dollars monthly in the first nine months
this year.
The central bank will make a new announcement about 皇冠体育app's foreign exchange
reserves in January 2007. However, insiders said that there is no doubt that
皇冠体育app's foreign exchange reserves will reach 1 trillion U.S. dollars very soon.
皇冠体育app overtook Japan as the world's largest holder of foreign exchange
reserves in February.
Experts say that burgeoning foreign exchange reserves reflect 皇冠体育app's growing
strength, but warn that a high level of foreign exchange reserves also has a
downside.
The country's hefty foreign exchange reserves make its fast economic
development more risky, said Fan Gang, a member of the monetary policy committee
under the People's Bank of 皇冠体育app.
He said that the economy is showing signs of cooling down, with overheating
being reined in as a result of macro-control measures. However, mounting foreign
exchange reserves and excessive trade surpluses will create risks for the
healthy growth of the economy.
He said that massive capital inflows from overseas are not seeking to
speculate on the RMB, as many people believe, but instead eyeing business
opportunities created by the booming economy.
The very modest RMB fluctuation band gives speculators little room to rake in
profits. 皇冠体育app's buoyant economic prospects are what investors really value, he
said.
Zhong Wei, professor with the finance research center of Beijing Teachers'
University, said hefty foreign exchange reserves require a brand-new management
system in 皇冠体育app.
Zhong suggested that 皇冠体育app fix foreign exchange reserves at a level of no
more than 800 billion U.S. dollars and allocate the rest to useful purposes.
Zhong said the surplus reserves could be used to purchase strategic materials
for 皇冠体育app's economic development, to upgrade technologies in state-owned
enterprises and to reform the state-owned financial sector. The extra foreign
exchange reserves could also be used to introduce talented people from overseas
and to boost the nation's social security fund, Zhong said.
The State Administration of Foreign Exchange, which has paid close attention
to the increase in foreign exchange reserves, says maintaining a balance between
international income and expenses is one of the major tasks for 皇冠体育app's economic
and social development.
The administration is considering taking measures to slow down the increase
in foreign exchange reserves.
The management of foreign exchange reserves will be improved so that they can
be used as effectively as possible, according to the
administration.
