China plans to increase the ratio of
Euros in its foreign exchange holdings given the stability in the European
Union (EU) economic growth and in the value of the European single
currency, central bank vice governor Wu Xiaoling said Thursday in
China plans to increase the ratio of Euros in its foreign exchange holdings
given the stability in the European Union (EU) economic growth and in the value
of the European single currency, said a central bank vice governor on Thursday.
However, China has no plans yet to reduce the proportion of US dollar assets
in its coffers, Wu Xiaoling told an economic forum in Brussels, the
Shanghai-based Oriental Morning Post reported Friday.
forex reserves reached US$ 1.2 trillion at the end of March and about 70 percent
of the holdings are believed to be in US dollar assets, especially US
To address the trade imbalance with western countries, China could take
measures to stimulate domestic consumption and improve the flexibility of the
"If we intend to solve the problem of imbalanced trade, we will first
increase the flexibility of the yuan exchange rate, but that will not be the
main means," Wu said.
It is more important for China to increase its citizens' incomes and boost
domestic consumption through the improvement of social security networks,
according to Wu.
She went on to say China will not bow to outside pressure and accelerate the
revaluation of the yuan.
If China's exchange rate reforms go smoothly, then the appreciation of the
yuan will continue, the central banker said. However, if the country's economy
runs into problems and the exchange rate reforms stagnate, then the Chinese
currency risks depreciation, Wu noted.
On the stock market, she said it is growing too fast and regulators hope they
can develop it in a more stable way. "If the stock market can't operate
smoothly, then investors' confidence will be hurt and their consumption will be
On top of a 130 percent rally in 2006, China's benchmark Shanghai Composite
Index has surged more than 60 percent so far this year before a 6.5 plummet
Wednesday that was caused by a hike of stamp tax to 0.3 percent from 0.1