I'm somewhat more concerned with this....
Chinese leader calls for spending more foreign exchange reserves at 17:06 on January 20, 2007, EST.
BEIJING (AP) - China's premier called Saturday for spending more of the country's foreign exchange reserves and spreading economic growth to the country's rural areas, seeking to sustain growth that has made China the world's fourth-largest economy.
The government "must actively explore and broaden the channels and manner of using foreign exchange reserves," Premier Wen Jiabao said at the end of a two-day financial policy conference.
He did not elaborate.
China's foreign exchange reserves are the world's largest, at US$1.06 trillion and growing.
How to spend the money, which is usually invested in U.S. Treasury securities and other low-risk instruments, has been hotly debated among Chinese officials. Beijing is unlikely to dump its U.S. holdings, analysts have said, because that would shock the U.S. economy - China's top export market - and the dollar, sending the value of China's reserves plummetting.
Wen also announced the debt-laden Agriculture Bank of China will be restructured and greater financial support given to rural China.
While many of the measures were expected, the conference, held once every five years, comes as the Chinese government is trying to ease friction at home over a widening gap between rich and poor and dampen criticism abroad about its trade surplus.
Wen acknowledged it is proving a challenge to manage domestic social strains, the trade surplus - which grew by 74 per cent last year to $177.47 billion - and inflows of investment.
"We must increase the sense of urgency and responsibility in financial work," Chinese television and the Xinhua News Agency quoted Wen saying.
With so much money flooding in, Chinese leaders and economists are worried the surge could touch off inflation or a binge of ill-conceived lending by banks and spending by companies. The trade surplus has also fuelled criticism in the United States and European Union that China was depressing the value of its currency, the yuan, making its exports cheaper.
In recent weeks, China has accelerated the yuan's rise against the dollar and Wen said exchange rate adjustments will continue.
Less clear, however, is whether China intends to use its foreign exchange reserves to buy up assets abroad, helping to reduce trade tensions. In debate over how to spend the reserves, which in addition to U.S. Treasury bonds have been used to bail out state banks, some Chinese scholars have suggested buying up oil and gas fields or other strategic commodities.
Xinhua said the trillion-dollar reserve "could buy Microsoft, Citibank and Exxon Mobil Corp., as well as General Motors and Ford."
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