On the results of auditing the Treasury, China’s government decided the country is no longer interested in increasing its foreign currency reserves. Policy makers reckoned that the country has amassed more than enough foreign currency holdings which are no longer beneficial for the economy. “It’s no longer in China’s favor to accumulate foreign exchange reserves,” Yi Gang, a deputy governor at the People’s Bank of China, said at the Chinese Economists 50 Forum yesterday. In his speech, Mr. Gang announced the official attitude of the government who is intending to put an end to the foreign intervention in the local market and also to make an effort to broaden the yuan’s trading range. According to Yi Gang, considering such changes in a long-term outlook the yuan’s appreciation benefits people in China more than it was previously believed. Reputable international agencies estimate that China’s foreign exchange reserves more than triple the ones of any other country. In the third quarter 2013, forex/gold holdings surged $166 billion to a record $3.66 trillion, which is bigger than the annual gross domestic product of Germany. Explaining further reforms, China’s central bank’s officials did not cover the issue of purchasing the U.S. bonds. No official information concerning these programs is available so far. However, analysts expect China’s government to taper the budget allocations for treasuries’ purchases. For the reference, the resolution to rein in foreign exchange reserves was adopted within the policy for the yuan’s appreciation.
