China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

China's foreign exchange reserves increased by 197.4
billion U.S. dollars in the first three months of this year to 3.04
trillion U.S. dollars by the end of March.

Xia Bin, a member of the monetary policy committee of
the central bank, said on Tuesday that 1 trillion U.S. dollars would be
sufficient. He added that China should invest its foreign exchange
reserves more strategically, using them to acquire resources and
technology needed for the real economy.

China should reduce its excessive foreign exchange
reserves and further diversify its holdings, Tang Shuangning, chairman
of China Everbright Group, said on Saturday.
The amount of foreign exchange reserves should be
restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang
told a forum in Beijing, saying that the current reserve amount is too
high.

Tang's remarks echoed the stance of Zhou Xiaochuan,
governor of China's central bank, who said on Monday that China's
foreign exchange reserves "exceed our reasonable requirement" and that
the government should upgrade and diversify its foreign exchange
management using the excessive reserves.

Tang also said that China should further diversify its
foreign exchange holdings. He suggested five channels for using the
reserves, including replenishing state-owned capital in key sectors and
enterprises, purchasing strategic resources, expanding overseas
investment, issuing foreign bonds and improving national welfare in
areas like education and health.