Teropitka Business and Finance

China can reduce its holdings of dollar assets, but not “exaggerated” as the country tries, dominates the structure of their assets in dollars adjusted foreign exchange reserves, analysts say.

The foreign-exchange reserves amounting to nearly 2.4 billion U.S. dollars by the end of last year – one third of the world – is concerned that the sheer magnitude of the undertaking could be counterproductive.

About 70 percent of reserves in dollar assets, estimated by experts, and the high ratio means that suffered after the collapse of the U.S. dollar, China with huge losses.

But it is also difficult for China to dump its dollar assets because it could trigger a domino effect on other investors and amortization compared to companies in China.

“China is faced with a dilemma,” said Dong Yuping, an economist at the Chinese Academy of Social Sciences.

The latest U.S. Treasury International Capital (TIC) data, China is a net buyer of U.S. government bonds in December, reducing its holdings of 34.2 billion U.S. dollars to 755.4 billion U.S. dollars.

Part of the total stock of the way from China into the short and long term, U.S. declined Among the owners of government bonds abroad to 20.9 percent in December from 23 percent in mid-2009, and sold its position as the largest investor in U.S. Treasury Japan.

The data suggest that China may be more actively diversifying their reserves away from U.S. Treasury bills, “says Jing Ulrich, managing director and chairman of the China stocks and commodities, JP Morgan.” We hope that the country something to change some of the exposure to other currencies. ”

Although it is unclear whether the sale is part of a coherent strategy, the country must obtain a share “substantial” assets in dollars from its reserves, said Sun Lijian, an economist at Fudan University.

“China should not unduly reduce their dollar assets, given its high liquidity of the market,” he said. Assets in dollars is relatively easy to sell if China Guide is the money to ensure their financial stability, he said.

More than a decade after the Asian financial crisis of 1997-98, there are indications that the increasing use of the reserves in growth in China for the purchase of resources, technology and attract top professionals abroad. Although important, Sun said, China should have enough reserves to protect their financial stability.

Asia was a blow against international financial crisis when speculators attacked the currencies of various countries appear not to fit you into a spiral of currency depreciation, economic contraction and social chaos.

Since then, Asian countries, increasing attention paid to foreign exchange reserves, and now has seven of the 10 nations.

While China’s growing reserves, but the fear increases the possibility of inviting speculative capital flows, especially if the economic recovery is faster than in other regions.

As soon as the transfer of capital from the country, there is no crisis on the domestic market and the economy, “said SO

To tackle the problem, China needs to accelerate its attempts to balance between the pace of domestic demand and exports, to spur consumption as an important engine for economic growth, “said Dong.