GUATEMALA CITY - China will stop stockpiling its massive foreign exchange
reserves, China's central bank governor Zhou Xiaochuan said in an interview
"Many people say that foreign exchange reserves in China are [already] large
enough," Zhou told the Emerging Markets magazine, whose latest issue was
released at a meeting of the Inter-American Development Bank in Guatemala.
"We do not intend to go further and accumulate reserves," Zhou said, adding
the government will "cut a small piece of reserves" for a new agency to be set
up for the management of its massive foreign reserves, which have
swollen because of the trade surplus.
He did not say how much money would be passed to the agency.
China's premier, Wen Jiabao, said last week that plans to form a new agency
to invest part of the country's swollen foreign exchange reserves, the world's
biggest at more than $1 trillion, would not have an adverse impact on the U.S.
China's central bank also said last week it would not significantly adjust
the composition of those reserves. A large part of them are denominated in
As the reserves have ballooned on the back of China's record trade surpluses,
demands have grown for part of the hoard to be invested more aggressively.
Investors have long fretted over Beijing's plans to diversify its foreign
exchange investments because of their potential impact on global markets.
Studies have shown investment by China and other Asian countries in U.S.
bonds has reduced long-term American interest rates by as much as 2 percentage
The state of Chinese trade affects such companies as IBM, Wal-Mart and