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| No Deliberate Attempt to Increase Forex Reserves |
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China is not deliberately attempting to increase its foreign currency reserves, Wu Xiaoling, deputy governor of the People's Bank of China, said in Beijing yesterday. In an exclusive interview with Xinhua News Agency, Wu said China's foreign currency reserves were US$853.6 billion at the end of February. China has come under criticism for its forex reserves, with critics saying that they are too large. Responding to reports that China's forex reserve is likely to top Japan's, Wu said that conditions that affect the size of a country's forex reserves vary from country to country. She said that fluctuations in the size of reserves reflect the state of a country's macro economy and balance of payments, noting that there are currently no set criteria by which one can say if a country's forex reserves are adequate or not. Wu attributed the increase in China's forex reserves to a number of factors including rising foreign investment and exports, and the country's current foreign currency policies. "Neither foreign currency deficits nor excessively large foreign currency reserves are advisable. Either situation would suggest the need for an economic structure adjustment," she said. The central bank has tabled a proposal to facilitate a shift from "foreign exchange held by the state" to "foreign exchange held by the people." "The proposal means to relax forex policies to allow individuals to hold more foreign currency," Wu explained. Wu said that certain previous reports and translations on these concepts were not accurate. She stressed: "'Foreign exchange held by the state' and 'foreign exchange held by the people' are colloquial expressions. 'Held by the people' should not be taken to mean 'hidden or concealed'." (Xinhua News Agency April 6, 2006) |
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