[Marxism] China values dollar holdings
sabocat59 at mac.com
Sun Aug 12 05:49:52 MDT 2007
International Herald Tribune
Xinhua: China's central bank says U.S. dollars are important part of
The Associated Press
Sunday, August 12, 2007
BEIJING: China sought Sunday to dampen speculation it will conduct a
massive sell-off of U.S. dollar holdings, with a central bank
official saying the dollar remains a mainstay of its foreign exchange
In an interview carried by the government's Xinhua News Agency, an
unnamed official with the People's Bank of China said U.S. dollars
and government bonds are "an important part of China's foreign
China's US$1.3 trillion in foreign exchange reserves are the largest
in the world and are believed to be comprised largely of dollar
assets, potentially giving Beijing enormous sway over the dollar's
value and currency markets worldwide.
A report in the British newspaper The Daily Telegraph this past week
that quoted Chinese government economists as saying China would dump
its dollar holdings in the event of a trade war with Washington added
to jitters in stock markets already unnerved by volatility in U.S.
Xinhua said the central banker's remarks were intended to counter
unspecified reports in Western media that China "is threatening to
carry out a sell-off of U.S. dollars." The Xinhua report was
prominently posted on the central government's main Web site, in a
further sign Beijing hoped the statement would underscore its
commitment to hold U.S. dollar assets and calm investors.
"China is a responsible investor in international financial markets,
and our country's foreign exchange reserves are managed with the
operational goals of safety, liquidity and profit," Xinhua quoted the
central bank official as saying.
"The U.S. dollar occupies an important position in the international
monetary system," the official was quoted as saying. "The U.S.
financial markets have high volume and great liquidity. U.S. dollar
assets, including U.S. government bonds, are an important part of
China's foreign reserve investments."
The People's Bank does not disclose the composition of the foreign
exchange reserves, which have swelled in recent years as China's
exports surged and investors poured money into the country to profit
from an economy now in its fourth straight year of double-digit growth.
But the reserves have become a political issue both within China and
between Beijing and Washington. As the dollar has fallen in value,
the People's Bank has come under pressure to diversify its holdings
to maintain the value of the reserves and improve returns.
Washington has pointed to China's growing reserves as proof that the
Chinese currency is undervalued, making Chinese exports cheap,
putting American manufacturers at a disadvantage and compounding a
hefty U.S. trade deficit. Several U.S. senators have renewed calls in
recent weeks to punish Beijing if it does not let the currency, the
yuan, rise in value.
In the Xinhua report, the Chinese central banker defended U.S.-China
economic and trade relations as underpinning the "stable development"
of the global economy.
"We attach great importance to actively promoting the harmonious
development of China-U.S. economic and trade exchanges," the official
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