China must diversify forex reserves faster

China should speed up diversification of its $3.2 trillion (Dh11.7 trillion) foreign exchange reserves away from dollar assets to hedge against risks of the US currency\'s possible long-term decline, an adviser to the People\'s Bank of China said yesterday. \"We should accelerate diversification in reserve investment,\" Xia Bin, an academic member of the central bank\'s monetary policy committee, told Reuters in an interview. China faces \"pressures and challenges\" in managing its fast-accumulating foreign exchange reserves, but the holdings may also present the country with an \"unprecedented\" opportunity to help its long-term development, Xia said. China\'s reserves, the world\'s largest, swelled by $152.8 billion in the second quarter to a record $3.2 trillion, driven by sustained capital inflows and its large trade surplus. Chinese officials have pledged to diversify the huge reserves — as much as 70 per cent of which are now in US dollar assets, according to analyst estimates — but the process has been gradual. Xia pointed to examples of such diversification, saying China has added more Japanese government debt and other non-dollar assets. The adviser said the US currency would retain its role as the major global reserve currency because it has no candidate to displace it. From / Gulf News