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People's Daily Online>>China Business

China's forex reserves are not such a huge advantage

By Zhang Yugui (Global Times)

10:46, November 16, 2011

China has a staggering $3.2 trillion-worth of foreign exchange reserves, envied by many developing countries and coveted also by Europeans now craving capital to ease their debt crisis.

This reserve also provides a solid foundation for China to combat the global economic crisis and seek economic discourse equal to its national power in the international setting.

However, confined by the current dollar-denominated international monetary system, China needs to do more than just stack up its dollar reserves to realize these goals.

Some economists might say that with this much in reserves at hand, China, as a major creditor to the US, can play tough. A simple sell-off of billions of American bonds will trigger a panic selling on the international market, therefore putting the American economy in danger. The softened stance taken by US diplomats in their dialogues with China in recent years seem to confirm the pressure a wealthier China can put on the US.

However, it is not so simple. If selling off US bonds were such a big leverage tool, Japan would have used it decades ago.

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There is a way out ... at 2011-11-16220.255.2.*
China, you should not keep on buying US treasury bonds.You have many bright people in China. Did you hear their views ? You should gather views from economists in the whole of China. Definitely there is a way out. Why you keep on buying US Treasury bond when you know that the US is printing more and more money year after year.Get this point to the Beijing leadership because this concern security and the future of China.Get a few people with great authority to study various options on how China should use it reserve instead of buying US Treasury bonds. Get views from all economists and all university professors in China. This is not a difficult tasks. Do not let someone in China with authority being bribe by foreign agents to keep on purchasing US Treasury bonds. All these years I find it very odd that someone with authority in China keep on buying Treasury Bonds ! It is like hitting your head on the wall. Get it done fast as the US dollars is sinking fast.

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