Hold still more dollars, economist urges China

From Reuters
via Yahoo News
Saturday, November 22, 2008

http://ph.news.yahoo.com/rtrs/20081122/tbs-financial-china-dollar-21231d...

BEIJING -- The best thing China could do with its foreign currency reserves is raise its holdings of U.S. dollars to support Washington's efforts to support the U.S. econony, state media on Saturday cited an economist as saying.

China has almost $2 trillion in foreign currency reserves, the largest in the world.

"China would suffer from losses if it sells off the dollar, so our strategy should be not to sell, but to slightly increase dollar reserves," the official Xinhua news agency quoted prominent Chinese economist Cheng Siwei as saying.

Cheng is a former vice-chairman of the Standing Committee of the National People's Congress, the country's largely rubber-stamp parliament. He was speaking at a forum in the southern province of Guangdong, Xinhua said.

China "can afford to do only what is corresponding to its level of development and national power amid a global crisis," he added. "We should be prudent as to how to deal with our forex reserves."

China earlier this month unveiled a 4 trillion yuan ($585.6 billion) stimulus plan to help its economy ward off the effects of the global slowdown.

"Cheng made the remarks amid increasing concern that China might use its forex reserve to finance its 4-trillion-yuan stimulus plan," Xinhua said, without elaborating.

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