Colossal foreign exchange reserves arouse debate

Updated: 2006-10-30 08:51

The very modest RMB fluctuation band gives speculators little room to rake in profits. China's buoyant economic prospects are what investors really value, he said.

Zhong Wei, professor with the finance research center of Beijing Teachers' University, said hefty foreign exchange reserves require a brand-new management system in China.

Zhong suggested that China fix foreign exchange reserves at a level of no more than 800 billion U.S. dollars and allocate the rest to useful purposes.

Zhong said the surplus reserves could be used to purchase strategic materials for China's economic development, to upgrade technologies in state-owned enterprises and to reform the state-owned financial sector. The extra foreign exchange reserves could also be used to introduce talented people from overseas and to boost the nation's social security fund, Zhong said.

The State Administration of Foreign Exchange, which has paid close attention to the increase in foreign exchange reserves, says maintaining a balance between international income and expenses is one of the major tasks for China's economic and social development.

The administration is considering taking measures to slow down the increase in foreign exchange reserves.

The management of foreign exchange reserves will be improved so that they can be used as effectively as possible, according to the administration.


(For more biz stories, please visit Industry Updates)