China's foreign exchange reserves in January climbed by $61.6 billion, a monthly record, to $1.6 trillion, Commerce Ministry officials said on Wednesday. At the end of 2007 China reported its foreign reserves at $1.53 trillion. Standard Chartered Bank Economist Steven Green said that about $23 billion of those additional reserves were traceable to China's current account surplus. Green added that the remaining growth in the January reserve accumulation, $38.6 billion, originated from flows of ‘hot money,’ the return of cash that had been invested in Hong Kong stocks, growth in foreign exchange lending, and/or distortions related to investors' betting on future appreciation of the yuan against the U.S. dollar.
Journal of Commerce
