By Geoff Dyer and Andrew Balls
The Financial Times
Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large
In a brief statement on its website, the government's foreign exchange regulator said one of its targets for 2006 was to "improve the operation and management of foreign exchange reserves and to actively explore more effective ways to utilize reserve assets".
It went on: "[The objective is] to improve the currency structure and asset structure of our foreign exchange reserves, and to continue to expand the investment area of reserves.
"We want to ensure that the use of foreign exchange reserves supports a national strategy, an open economy and the macro-economic adjustment."
The announcement came from the State Administration of Foreign Exchange (Safe). It gave no more details about whether this meant a big shift in the investment strategy for Chinese reserves, which according to local press reports reached nearly $800bn at the end of last year and are expected by economists to near $1,000bn this year.
The regulator also said it would end quotas on the amount of foreign currency Chinese companies can acquire to invest in overseas assets, a decision that removes a bureaucratic hurdle facing companies that plan to make international acquisitions.
The statement comes at a time of growing debate in
However, according to Stephen Green, economist for Standard Chartered in
"It is a subtle but clear signal that they are interested in moving away from the US dollar into other currencies, and are interested in setting up some kind of strategic commodity fund, maybe just for oil, but maybe for other commodities," he said.
The Group of Seven leading industrialized economies has repeatedly called for an adjustment in global trade imbalances, including a rise in the renminbi. The
John Snow, US Treasury secretary, speaking earlier on Thursday, repeated his call for
However, some economists believe it would be a mistake for
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