Colossal foreign exchange reserves arouse debate
(Xinhua)
Updated: 2006-10-30 08:51
China's foreign exchange reserves will burst the 1 trillion U.S. dollar
barrier at the end of October or early November, experts have predicted,
triggering discussion across the country.
The People's Bank of China, or
central bank, announced two weeks ago that China 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 China's foreign exchange reserves in January
2007. However, insiders said that there is no doubt that China's foreign
exchange reserves will reach 1 trillion U.S. dollars very soon.
China
overtook Japan as the world's largest holder of foreign exchange reserves in
February.
Experts say that burgeoning foreign exchange reserves reflect
China'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 China.
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.
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