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Adviser suggests increasing China's gold reserve
By Zhang Fengming |
December 3, 2010, Friday
|
Online Edition
Online Edition
CHINA should consider boosting its gold reserves as a long-term strategy to pave way for the internationalization of the local currency, central bank adviser Xia Bin wrote in a report published today after the country's import of gold surged in this year.
The country must revise its foreign-reserves management principle, Xia wrote.
China is the world's largest producer and second-biggest user of the precious metal and has a world-record US$2.65 trillion in foreign reserves.
Imports of gold by China jumped almost fivefold in the first 10 months from the entire amount shipped in last year, the Shanghai Gold Exchange said yesterday. Shipments were 209 metric tons compared with 45 tons for all of 2009, said exchange Chairman Shen Xiangrong.
"Building gold as the basis of solvency has been used through history for the rise of a strong global currency," Xia said.
"Having a corresponding amount of solvency is a necessary precondition and indispensable safeguard in the long-term strategy for the internationalization of the yuan."
China has increased gold reserves by 454 tons to 1,054 tons since 2003, the State Administration of Foreign Exchange said last April. The glittering metal only accounts for 1.6 percent of China's foreign reserves, according to the World Gold Council.
Gold prices hit a record US$1,403 an ounce in November. The yellow metal is set for a 10th annual increase, the longest winning streak since at least 1920, spurring central banks globally to add the metal to reserves.
China also needs to set up a commission soon under the State Council to make plans for investing its foreign reserves overseas, Xia said. The investments should include oil, resources, equipment and technology, he added.
The country must revise its foreign-reserves management principle, Xia wrote.
China is the world's largest producer and second-biggest user of the precious metal and has a world-record US$2.65 trillion in foreign reserves.
Imports of gold by China jumped almost fivefold in the first 10 months from the entire amount shipped in last year, the Shanghai Gold Exchange said yesterday. Shipments were 209 metric tons compared with 45 tons for all of 2009, said exchange Chairman Shen Xiangrong.
"Building gold as the basis of solvency has been used through history for the rise of a strong global currency," Xia said.
"Having a corresponding amount of solvency is a necessary precondition and indispensable safeguard in the long-term strategy for the internationalization of the yuan."
China has increased gold reserves by 454 tons to 1,054 tons since 2003, the State Administration of Foreign Exchange said last April. The glittering metal only accounts for 1.6 percent of China's foreign reserves, according to the World Gold Council.
Gold prices hit a record US$1,403 an ounce in November. The yellow metal is set for a 10th annual increase, the longest winning streak since at least 1920, spurring central banks globally to add the metal to reserves.
China also needs to set up a commission soon under the State Council to make plans for investing its foreign reserves overseas, Xia said. The investments should include oil, resources, equipment and technology, he added.
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