China’s forex reserves surpass $1.2 Trillion

Last fall, China’s reserves officially surpassed the $1 Trillion mark, a watershed event that would have been nearly unthinkable several years ago.  This week, China announced that its reserves now exceed $1 Trillion, having grown by almost 40% year-over-year and showing no signs of slowing.  Most of the increase can be attributable to growth in China’s trade surplus, which now exceeds $40 Billion, on a quarterly basis.  China
has already delegated the management of $250 Billion of its reserve to a state agency; perhaps this latest development will compel it to further delegate active management of the reserves.  Xinhua News reports:

Continuous growth of forex reserve has in fact increased the pressure on appreciation of the Chinese currency, which in turn has exerted greater pressure on value preservation of China’s forex reserves, which are estimated to reach 2.9 trillion U.S. dollars in 2010.

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