BEIJING, Nov 7, 2006 (AFP) – Boosted by a huge and growing trade surplus, China’s forex reserves have shot past the one-trillion-dollar mark and nothing is likely to stop them rising even further, analysts said Tuesday. “They have grown by 200 billion dollars a year over the past three years … and they will continue to grow at the same pace in 2007,” Tim Condon, Singapore-based chief economist for ING Barings told AFP.
“The authorities have stated concerns over this but I have not seen anything that would change my view of 1.5 trillion dollars in forex reserves in the next few years.”
The State Administration of Foreign Exchange said the reserves had broken through the trillion-dollar mark late Monday, making China the world’s largest holder, ahead of Japan.
An inflow of foreign investment and a continuous stream of hot money looking for short-term speculative gains have helped the reserves reach their current size but booming exports are by far the single most important factor.
The trade surplus in the nine months to September hit 110 billion dollars, already above the 102 billion dollars recorded in 2005 and continuing to fuel protests, led by the United States, that Beijing keeps its currency underva