China’s forex reserves should move away from US dollar to curb risks: economist Zhang Ming
‘Possible future sanctions from the US’ under a new US president have set off alarms in Beijing’s policy circles
Beijing should adjust its strategy in managing China’s US$3.3 trillion worth of foreign-exchange reserves, given the lingering threat of US financial sanctions, according to a prominent Chinese economist.
The warning by Zhang Ming, deputy director of the Chinese Academy of Social Sciences’ Institute of Finance and Banking, is the latest high-profile call for diversification and reducing exposure to the US dollar.
It also reflects the rising concern in Beijing’s policy circles that China needs to prepare to counter any possible actions from the new US president, with the election set to take place next week.
“The management of these [forex] reserves faces significant challenges in maintaining and increasing their value,” Zhang wrote in an article published on the website of the China Chief Economist Forum think tank on Tuesday.
“Particularly, [China must] address the financial risks associated with possible future sanctions from the US.”
China’s foreign-exchange reserves, the largest in the world, and driven by its high export revenues, totalled US$3.316 trillion as of September, according to the State Administration of Foreign Exchange.
