The US dollar's depreciation is "negative" for the Chinese economy, China's top currency regulator said yesterday.
China will manage its foreign-exchange reserves "according to set guidelines," Hu Xiaolian (胡曉煉) told reporters in Beijing, where she was attending the annual meeting of the National People's Congress. "To the extent that dollar depreciation is negative for the global economy, the Chinese economy will definitely be affected."
A record trade surplus has flooded the Chinese economy with cash and drove the world's largest foreign currency reserves to US$1.5 trillion by the end of last year.
PHOTO: AFP
Chinese Premier Wen Jiabao (
"It's the frying pan or the fire for China," said Stephen Green, senior economist at Standard Chartered Bank PLC in Shanghai. "If they stop buying US dollars or diversify, this will only do further damage to their existing holdings."
Chinese Commerce Minister Chen Deming (
The surplus is"hard to predict," he said.
In December, Chen said the declining dollar is a bigger concern for the economy than the yuan's gains.
The US dollar's depreciation makes major commodities, such as gold and oil more expensive, and reduces the wealth of countries and companies that hold US dollar assets, Chen said at the time.
China's economy, the world's fourth-largest, may grow 10 percent this year, the IMF predicted, down from 11.4 percent last year.
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