China should consider reducing foreign reserves

BEIJING – China’s needs only between US$800 billion and US$1,3 trillion in foreign exchange reserves and it should consider channelling some of its huge stockpile into domestic companies and strategic resources, a top Chinese banker said yesterday.

The rapid build-up in reserves, which hit a record of US$3,05 trillion by the end of March, has been ‘a big problem’ for the economy, Tang Shuangning, Chairman of China Everbright Bank, said in an article published in the official Financial News.The reserves, already the world’s largest, have become excessive, Tang said, saying it only needed enough to service foreign debt, pay for imports and accommodate earnings repatriated by foreign firms operating in China.Analysts say the rise in China’s reserves, which are now nearly triple Japan’s holdings, the world’s second-biggest reserve holder, have fuelled inflationary risks in the country.- Nampa-Reuters

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