China Reserves Top $1 Trillion Mark

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By Benny Nardino | January 14, 2007

It is official. The Chinese growth and rise to a strong economic force is here. What does this mean to you and your forex trading? Does this neck-breaking speed growth has any effect on you socially and economically? Read More..

BEIJING: China’s foreign currency reserves, already the world’s largest, passed $1 trillion at the end of November, two central bank researchers said in a paper released yesterday.

China’s reserves have skyrocketed as the bank drains money from the economy by issuing bonds in an effort to contain inflationary pressures amid a flood of export revenues. The growth has prompted debate in China over how the country should use the mountain of money. Reserves reached $1.039 trillion at the end of November, researchers Jiao Jinpu and Liu Xiangyun said in a paper released at a conference in Beijing, according to Dow Jones Newswires.

Outside experts had estimated earlier that China’s reserves passed the $1 trillion mark in November. Since then, the reserves are believed to have risen to at least $1.1 trillion.

The central bank officially announces the size of its reserves only four times a year, and said in its last quarterly report they had risen to $987.9 billion by the end of September.
That mountain of money is equal to about 40 per cent of China’s annual economic output and accounts for half of all Asian reserves.

The composition of China’s reserves is secret, but economists believe about 70pc is in US Treasury bills, much of the rest in euros and a small amount in yen. Purchases of assets in other currencies are believed to be growing as the bank diversifies its holdings.

However, China’s galloping economic growth is worrying, according to Ma Kai, minister for the national commission for reform and development, which he says is contributing to the growing rich-poor gap and environmental damage.

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