China will continue to shift its foreign reserves into
non-dollar assets, but U.S. government debt will remain the prime holding,
former central bank adviser Fan Gang said Monday.
During a conference in Kuala Lumpur, in an interview with
Dow Jones Newswires and Malaysian media, Ex- PBOC advisor said he expects the Yuan
to keep rising gradually, regardless of what the dollar does. He
added further The U.S. will still continue to be the major holding for China's
reserves. "But definitely Beijing will look for more
alternative-investment opportunities."
Beijing is under great political pressure to let the tightly
controlled Yuan, or Renminbi, rise faster. Legislation now before the U.S.
Congress would target imports from China and other countries with currencies
perceived to be undervalued.
This will be good for China by changing its economic
structure away from a dependence on exports and by forcing Chinese companies to
face stiffer competition. At the same time, though, a stronger Yuan might not
result in more U.S. jobs, as any jobs lost in China could instead go to other
competitors like Vietnam or Malaysia, he said.
Policymakers also need to "stick" to China's
CNY7.5 trillion limits for bank lending this year. He said lending growth is
still very high and there is still a large amount of excess liquidity even with
the current limits in place.
By the end of August, financial institutions extended CNY5.71 trillion in new loans, some 76% of the full-year limit.
