BEIJING, May 11 -- The central bank said
yesterday that the country will not sell large amounts of U.S.
dollar-denominated assets to diversify its foreign exchange reserves.
The People's Bank of China also warned of a risk of
rising inflation and a rebound in investment as the economy steamed ahead in the
first quarter, growing by 11.1 percent year on year.
Authorities have said the country will diversify part
of its foreign exchange reserves, which amounted to 1.02 trillion
dollars by the end of March and are believed to be invested mainly in
The central bank said it will mainly address the
issue of newly added reserves by widening the foreign currency investment
channel and reaffirmed the importance of its U.S. dollar-denominated assets.
They will remain an important part of China's outbound investment, the bank said
in its monetary policy report for the first quarter, which was published on its
The bank also said it would keep the yuan basically
stable at a reasonable level.
The bank warned in the report that the country faced
the risk of inflation and of a rebound in investment, and that it must prevent
the economy from overheating.
In the first quarter, urban fixed asset investment
grew by 25.3 percent year on year, 0.9 percentage points faster than in the
first two months. Meanwhile, the consumer price index rose by 2.7 percent year
on year, but in March the index grew by 3.3 percent, bypassing the alarm level
of 3 percent set by the central bank.
In another development, the State Administration of
Foreign Exchange (SAFE) announced yesterday that the country's current account
surplus hit 249.9 billion dollars last year, an increase of 55 percent over the
2005 level of 160.8 billion dollars.
The jump came mainly from the increase in the trade
of goods, which reached 217.7 billion dollars, up 62 percent year on year, the
foreign exchange regulator said on its website.
The surplus in the country's capital and financial
account reached 10 billion dollars, down 84 percent. The SAFE attributed the
fall to the strong growth in outbound securities investment.
It gave no figures for last year's overall balance of
(Source: China Daily)