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Testing times for China's foreign exchange reserves

By Zhu Ning | China Daily | Updated: 2014-02-18 07:16

China's foreign exchange reserves, the largest in the world, reached a record $3.82 trillion last year.

Since China's reserves started accumulating more than a decade ago, the increase has been widely regarded as an encouraging and beneficial development. With China gradually becoming the "world's factory" and posting an increasing trade surplus in the past decade, Chinese reserves ballooned. During that period, the Chinese felt positive about growing reserves. But now they are feeling increasingly nervous about the situation.

With the rolling out of the three stages of quantitative easing, the Chinese realized with great disappointment that the real value of their reserves had depreciated considerably due to the United States' monetary policy, which is beyond the Chinese government's control.

Testing times for China's foreign exchange reserves

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