China's policy on its 1.3 trillion dollars of forex reserves is unchanged, and Washington need not worry about the prospect of a massive sell-off of US-dollar assets, economists said Monday.
The People's Bank of China, the nation's central bank, issued a statement over the weekend seeking to soothe fears that China might dump part of its US-dollar assets in a deliberate attempt to send the greenback into a tailspin.
"The dollar assets, including US government bonds, are an important component of China's foreign exchange reserve investment," the China Daily reported, citing the central bank. The statement should "scotch rumours" that Beijing would sell off its US dollar reserves in response to pressure from Washington to revalue the Chinese currency, the yuan, the paper commented. The renewed speculation about the fate of the world's largest forex reserves was triggered by a report last week in Britain's Daily Telegraph quoting two Chinese economists as raising the idea of a dollar asset sale.
Unusually for comments made by academics with no direct policy-making powers, the economists' statements prompted a response by US President George W. Bush, who warned that any such pressure by China would be "foolhardy."
He Fan, one of the two economists quoted in the British report, said Monday he did not agree with the way his original remarks had been interpreted. "What I said was exchange rate reform benefits both China and the US," He, a researcher at the prestigious Chinese Academy of Social Sciences told."
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