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18

China To Increase Gold Reserves

China should increase its gold reserve from 600 tons to about 2,500 tons in a short term

Some economists have been appealing to the State Administration of Foreign Exchange to expand China's gold reserve after the Renminbi appreciation in a bid to reduce the country's reliance on the greenback, Xinhua new agency reported.

But others believe it's not a proper time to buy gold at such high prices.

The State Administration of Foreign Exchange did not let out their voice, but folk economists have been prompting them to take actions.

China should increase its gold reserve from 600 tons to about 2,500 tons in a short term and to 3,000 tons in a long term to cope with the versatile exchange rate risks, said Teng Tai, an economist of China Galaxy Securities Company.

Too little gold reserve would pose threat not only to China, but also to the global monetary system, Teng said.

China should increase gold reserve to reduce the foreign exchanges risks and diversify its state reserve with various goods, like gold and oil, in the long run, said Shen Xiangrong, director of the Shanghai Gold Exchange, China's sole gold market.