China has no intention of selling its international reserves denominated in U.S. dollars

Saturday, May 30, 2020

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China has no intention of selling its international reserves denominated in U.S. dollars, a spokesman for the country's Central Bank said Monday. Last week British newspaper The Daily Telegraph quoted Chinese officials as saying the Central Bank could start selling large volumes of dollar assets if the United States were to introduce trade sanctions against Beijing to force it revaluate the national currency, the yuan. The paper said the move could cause the dollar to plummet against other world currencies. A Central Bank spokesman said: "China is a responsible investor on global financial markets and the structure of China's international reserves is based on economic realities, the development of the global foreign exchange system, and fluctuations on international capital and forex markets." China's has foreign currency of around $1.33 trillion dollars. The country's U.S. dollar-denominated assets include cash dollars and Treasury bonds. A major stumbling block in U.S.-China trade relations is that Beijing keeps its currency undervalued, giving its exporters competitive advantages and adding to its multi-dollar trade surplus. Washington is urging China to implement reforms to revalue the national currency, so as to narrow the U.S. trade deficit with China, which totaled more than $230 billion in 2006. The spokesman said China and the United States maintained close trade and economic relations, which played an important role in promoting both bilateral and global economic development.

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