Some Chinese economists are urging the government to quadruple its gold reserves to 2,500 tons from the current 600 tons because the country¡¯s foreign exchange reserves had become the world¡¯s largest, an official industry newspaper reported Tuesday.

¡°China should raise its gold reserves so those reserves can account for 3 percent to 5 percent of the foreign exchange reserves, instead of current 1.3 percent,¡± the China Gold quoted Liu Shanen, an expert at Beijing Gold Economy Development Research Center, as telling a conference.

He said the suggestion was made in light of the country¡¯s economic strength and the size of its foreign trade.

China¡¯s foreign exchange reserves rose to a record US$875.1 billion by the end of March on the back of a surge in its trade surplus and an increase in foreign direct investment.

¡°More gold reserves will help the government prevent risks and handle emergencies in case of future possible turbulence in the international political and economic situation,¡± the paper said, citing Tan Yaling, a researcher with the Bank of China.

A weak dollar had also made more gold holdings necessary, it quoted Liao Yingmin as saying. Liao is a researcher at the Development Research Center of the State Council, a government think tank.

China has been trying to gradually diversify its reserve holdings away from the dollar. But economists say fears of a collapse in the U.S. currency will prevent any dramatic shift.

Central bank official figures showed China¡¯s gold reserves have remained unchanged since December 2002.

Gold prices have risen 32 percent this year due to tension in the Middle East, firm oil prices and a volatile dollar.

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