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China's foreign currency reserves, already the world's largest, passed US$1 trillion at the end of November, two central bank researchers said in a paper released Saturday.

China's reserves have skyrocketed as the bank drains money from the economy by issuing bonds in an effort to contain inflationary pressures amid a flood of export revenues. The growth has prompted debate in China over how the country should use the mountain of money.

Reserves reached US$1.039 trillion at the end of November, researchers Jiao Jinpu and Liu Xiangyun said in a paper released at a conference in Beijing, according to Dow Jones Newswires.

Outside experts had estimated earlier that China's reserves passed the US$1 trillion mark in November. Since then, the reserves are believed to have risen to at least US$1.1 trillion.

The central bank officially announces the size of its reserves four times a year, and said in its last quarterly report they had risen to US$987.9 billion by the end of September.

That mountain of money is equal to about 40 percent of China's annual economic output and accounts for half of all Asian reserves. Japan has the world's second-biggest foreign reserves, which stood at US$875 billion at the end of December.

The composition of China's reserves is not made public, but economists believe about 70 percent is in US Treasury bills, much of the rest in euros and a small amount in yen.

Purchases of assets in other currencies are believed to be growing as the bank diversifies its holdings.

Economist Stephen Green at Standard Chartered Bank in Shanghai said in a report this week that the central bank made an estimated US$29 billion profit last year from its foreign assets.

The central bank has been forced to buy up tens of billions of dollars worth of currency every month in order to keep the flood of money from China's trade surplus, which reached a record US$177.5 billion last year, from igniting inflation.

Beijing has begun easing currency controls in an effort to reduce such strains.

Economists are debating how China's reserves might be put to use to address pressing needs.

Some have suggested Beijing use the money to buy oil and other resources abroad for China's booming economy. Others say it could pay for more schools and social programs.