International Herald Leader: China to Diversify Its Foreign Exchange Reserves

The International Herald Leader, a Xinhua publication, reported that, according to a January 11, 2011, release from the Bank of China, China’s foreign exchange reserves had reached US$2.8473 trillion by the end of 2010, an increase of about US$448.1 billion, or 18%, over the previous year. Reports from September 2010 indicate that about 65% of China’s reserves are in US dollars. In 2010, China was active in acquiring government debts in countries such as Japan, Spain, and South Korea, in anticipation of the depreciation of the U.S. dollar. “If investment in government bonds issued by South Korea and Japan demonstrates China’s short-term investment strategy, the purchase of European government bonds indicates China’s long term strategy.”