China foreign exchange reserves top ONE TRILLION U.S. DOLLARS
AFX News Limited
China foreign exchange reserves top 1 trln usd - state TV - UPDATE2
11.06.2006, 07:58 AM
BEIJING (XFN-ASIA) - China's foreign exchange reserves have topped the 1.0 trln usd level, state television CCTV said.
The report cited the latest figures from the State Administration of Foreign Exchange (SAFE), although it did not specify when reserves had reached the 1.0 trln usd level.
The announcement had been long expected, particularly as SAFE said that reserves hit 987.9 bln usdat the end of September.
China had already surpassed Japan earlier this year as the world's top holder of foreign exchange reserves. Japan had reserves of 881.27 bln usd at the end of September against 878.75 bln in August.
China's reserves have swelled on the back of surging foreign direct investment inflows, bets on currency appreciation and a ballooning trade surplus.
The nation had a trade surplus of 108.9 bln usd as of the end of September, surging past the 102 bln usd recorded during the whole of last year.
China's trade surplus is expected to hit 140 bln usd for all of this year, the official Shanghai Securities News reported today, citing assistant to the commerce minister Fu Ziying.
Foreign direct investment reached 42.59 bln usd in the first nine months of this year and is expected to hit 60 bln usd for all of 2006, according to official forecasts.
The report of reserves hitting 1 trln usd is widely expected to renew the debate over the value of China's currency, the yuan, which many of the nation's trading partners contend is deeply undervalued.
A coalition of US industry and labor has repeatedly called for Beijing to allow the yuan to appreciate faster but authorities here have taken a go-slow approach since the currency was revalued by 2.1 pct against the dollar in July last year.
'This puts lots of pressure on the government and makes it a more urgent issue to control the increase in foreign exchange reserves,' said Zhao Qingming, a China Construction Bank economist and former central bank researcher.
But some Chinese economists -- as well as government officials -- contend that a steep appreciation would not be in China's interest.
Fan Gang, a Beijing-based economist and a non-government representative on the monetary policy committee under the central bank, said in an opinion piece published in the Wall Street Journal today that large fluctuations in the yuan's value could only lead to further inflows of speculative capital betting on further moves.
A sharp move to revalue the yuan could have 'catastrophic' consequences for the domestic economy, he said, blaming an overvalued dollar on the world's monetary imbalances.
China's central bank has also been struggling with the mounting pile of foreign reserves, which have been adding to the nation's money supply.
Last Friday, the central bank raised the reserve requirement on bank deposits by 0.5 percentage point, citing a build-up of liquidity in the banking system from the nation's growing trade surplus. It was the third such increase this year.
juan.chen@xfn.com
Neither the Subscriber nor AFX News warrants the completeness or accuracy of the Service or the suitability of the Service as a trading aid and neither accepts any liability for losses howsoever incurred. The content on this site, including news, quotes, data and other information, is provided by AFX News and its third party content providers for your personal information only, and neither AFX News nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.
© 2006 Forbes.com LLC.™ All Rights Reserved
China foreign exchange reserves top 1 trln usd - state TV - UPDATE2
11.06.2006, 07:58 AM
BEIJING (XFN-ASIA) - China's foreign exchange reserves have topped the 1.0 trln usd level, state television CCTV said.
The report cited the latest figures from the State Administration of Foreign Exchange (SAFE), although it did not specify when reserves had reached the 1.0 trln usd level.
The announcement had been long expected, particularly as SAFE said that reserves hit 987.9 bln usdat the end of September.
China had already surpassed Japan earlier this year as the world's top holder of foreign exchange reserves. Japan had reserves of 881.27 bln usd at the end of September against 878.75 bln in August.
China's reserves have swelled on the back of surging foreign direct investment inflows, bets on currency appreciation and a ballooning trade surplus.
The nation had a trade surplus of 108.9 bln usd as of the end of September, surging past the 102 bln usd recorded during the whole of last year.
China's trade surplus is expected to hit 140 bln usd for all of this year, the official Shanghai Securities News reported today, citing assistant to the commerce minister Fu Ziying.
Foreign direct investment reached 42.59 bln usd in the first nine months of this year and is expected to hit 60 bln usd for all of 2006, according to official forecasts.
The report of reserves hitting 1 trln usd is widely expected to renew the debate over the value of China's currency, the yuan, which many of the nation's trading partners contend is deeply undervalued.
A coalition of US industry and labor has repeatedly called for Beijing to allow the yuan to appreciate faster but authorities here have taken a go-slow approach since the currency was revalued by 2.1 pct against the dollar in July last year.
'This puts lots of pressure on the government and makes it a more urgent issue to control the increase in foreign exchange reserves,' said Zhao Qingming, a China Construction Bank economist and former central bank researcher.
But some Chinese economists -- as well as government officials -- contend that a steep appreciation would not be in China's interest.
Fan Gang, a Beijing-based economist and a non-government representative on the monetary policy committee under the central bank, said in an opinion piece published in the Wall Street Journal today that large fluctuations in the yuan's value could only lead to further inflows of speculative capital betting on further moves.
A sharp move to revalue the yuan could have 'catastrophic' consequences for the domestic economy, he said, blaming an overvalued dollar on the world's monetary imbalances.
China's central bank has also been struggling with the mounting pile of foreign reserves, which have been adding to the nation's money supply.
Last Friday, the central bank raised the reserve requirement on bank deposits by 0.5 percentage point, citing a build-up of liquidity in the banking system from the nation's growing trade surplus. It was the third such increase this year.
juan.chen@xfn.com
Neither the Subscriber nor AFX News warrants the completeness or accuracy of the Service or the suitability of the Service as a trading aid and neither accepts any liability for losses howsoever incurred. The content on this site, including news, quotes, data and other information, is provided by AFX News and its third party content providers for your personal information only, and neither AFX News nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.
© 2006 Forbes.com LLC.™ All Rights Reserved
posted by Walking Contradiction at 11/06/2006 11:48:00 PM
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