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China will not pursue large forex reserves

07-05-2010 11:18 BJT

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China's foreign exchange regulator says the country will not pursue large-scale foreign exchange reserves. Instead, China will continuously adjust the currency composition of its official forex reserves.

The State Administration of Foreign Exchange says China will not pursue large-scale forex reserves, nor a long-term international payment surplus. China currently holds 2.45 trillion U.S. dollars in reserves. The forex regulator says the country hasn't been deliberately building up reserves, but it's a result rather of unbalanced international payments.

Ding Zhijie, professor of Univ. of Intl' Business & Economics, said, "The Chinese government has been dedicated to maintaining balanced international payments. With sustained effort over many years, the situation has become better. Currently, we hope that both the domestic and global economy will be balanced."

The forex administration also reiterates that the major problem is that most of the forex assets are held by governments. China is now encouraging companies and individuals to hold and diversify their foreign currency. Experts point out that in developed countries, most of the foreign assets holders are individuals. But in China, governments hold more than two thirds of foreign assets.

Ding said, "It is the first time that the forex administration has officially encourage companies and individuals to hold foreign currencies in written form. This is good news for firms and individuals, as they may get some preferential policies to deploy their investments globally."

Experts say the most urgent work for the government is to further reform the forex management system. Any reasonable foreign currency demand from domestic companies and individuals should be approved. Experts suggest that the government should relax control over external investments made by Chinese firms and individuals.

Editor:Zhang Jingya |Source: CCTV.com

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