China foreign reserves are
on an increasing trend since the year 2002. In 2007,
it has the world’s greatest amount of foreign
reserves amounting up to USD1528 billion, exceeding
the next largest holder, Japan. Official sources
elaborate that
US dollar holdings comprise of 60% of the
reserves. Due to this large proportion of US dollars
constituting in China’s foreign exchange reserves,
plus the fact that China does not have diversified
channels, the book value of these assets has
suffered tremendously after the year 2000 when US
dollar drops significantly.
