Pressures of forex excess

China's enormous foreign exchange reserves are directly related to the fact that the yuan is not yet used as an international currency

China faces challenges because of its expanding foreign reserves, Huang Guobo, chief economist of the State Administration of Foreign Exchange, said during an interview with netizens on Thursday, although he emphasized that foreign reserves had helped fend off the impact of the global financial crisis, maintain economic growth, increase employment and raise people's incomes.

The rapid increase in China's foreign reserves - $3.95 trillion by the end of the first quarter - has added to the woes of macroeconomic regulation, increased the pressure of inflation, restrained the use of the monetary policy and created a bigger exchange rate risk, Huang said.