Dollar depreciation dilemma

China should expand the scale of its sovereign wealth funds to protect its growing foreign exchange reserve

Its $3.2 trillion foreign reserve means China is sitting on a volcano. How to manage its ever-expanding national wealth and prevent its national economic and financial security from being endangered by the still-fermenting debt risks in the United States and Europe poses a severe challenge to the country.

Up until 1995, developed countries still controlled the majority of global foreign reserves, while developing countries were plagued by the insufficiency of their foreign reserves. Since then the situation has substantially changed as foreign reserves held by emerging economies have dramatically increased and their proportion of the world's total reserves has continuously kept rising.