China should stop buying US Treasuries and take steps to reduce its holdings in those bonds, a Hong Kong newspaper yesterday quoted a high-ranking Chinese official as saying.
China should instead increase imports from the US, said Cheng Siwei (成思危), a vice chairman of the National People's Congress, the Wen Wei Po reported.
Currency traders said the report caused some players to sell the US dollar, prompting the currency to pull back from earlier gains. The US dollar was trading at ?117.68 yesterday afternoon in Tokyo, up ?0.03 from late Monday in New York.
Analysts estimate that China invests about three-quarters of its foreign currency reserves -- which last year rose to US$818.9 billion -- in US Treasuries.
Cheng, who spoke at a conference in Hong Kong, also said that US restrictions on some high-tech, high-value exports to China have contributed to the trade imbalance between the two nations, the Chinese-language paper said.
Last year, the US reported a US$202 billion trade deficit with China, a record with any country.
The official said that the short-term strategy for the Chinese currency's regime is to widen the yuan's trading band at an appropriate time, while keeping the currency stable and avoiding a buildup in foreign reserves, the paper reported.
In the long term, Cheng said the goal for the yuan is to reach full convertibility, though there is no timetable, the paper reported.
China's central bank said yesterday that Cheng's remarks on the country's use of its foreign exchange reserves and yuan reform are his own and not representative of the bank's position.
Last July, China revalued the yuan, raising its value by 2.1 percent against the dollar and allowing it to trade in a restricted float. Still, the government exerts a great deal of control over the yuan's value, and it has appreciated only about 1 percent since that time.
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