China's foreign exchange assets remained safe and even yielded profits last year despite the global financial crisis, a top forex regulator said Wednesday, before warning "grave challenges" lay ahead. "By the end of 2008, the national foreign exchange reserve assets on the whole were kept safe," Fang Shangpu, a deputy administrator of the State Administration of Foreign Exchange, told reporters.
"We provided abundant liquidity (for the country) to cope with the crisis and at the same time we also made some profits," he said, without elaborating. However, he warned that the financial crisis had not yet bottomed out and its negative impacts would continue to be felt, possibly affecting China's forex investments. "China holds nearly two trillion dollars in foreign exchange reserves that is (exposed) to the international market. It certainly faces grave challenges," Fang said.
Asked whether China will continue to buy US treasury bonds after President Barack Obama signed a 787-billion-dollar bill to rescue the US economy, Fang would not specify, but called for measures to protect such investments. "We hope major reserve currency economies will take active steps to effectively tackle the financial crisis and economic recession ... and protect investors' rights and interests and boost their confidence," he said. China overtook Japan as America's biggest foreign creditor in September and as of October held 652.9 billion dollars in US Treasury bonds. Its forex reserves reached 1.95 trillion dollars by the end of 2008.
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