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China seeks more channels to use massive foreign exchange reserves
2007-03-02 05:42:36 Xinhua English

BEIJING, March 3 (Xinhua) -- China is seeking more channels to use its massive foreign exchange reserves, which are expected to continue growing after it quintupled in the past five years, said some financial experts before the annual session of the country's top political advisory body that opens Saturday afternoon.

Contrary to its past policies, the country is implementing stricter regulation on incoming foreign exchanges and loosening rigid controls on outgoing reserves, said Huang Zemin, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) and head of the International Finance Institute of East China Normal University.

The foreign exchange reserves reached 1.066 trillion U.S. dollars at the end of 2006, up from 212.2 billion dollars at the end of 2001, according to the People's Bank of China.

The advisor said the country is seeking more channels to ease the pressure generated by rising foreign reserves, allowing businesses to keep a larger share of their foreign income and encouraging overseas financial investment in the form of qualified domestic institutional investors (QDII).

The State Administration of Foreign Exchange (SAFE) granted 15 banks overseas investment quotas totaling 13.4 billion U.S. dollars in 2006. Meanwhile, 15 insurance companies were granted overseas investment quotas of 5.17 billion U.S. dollars and one fund management company was given a quota of 500 million U.S. dollars.

The Chinese government should make use of its foreign reserves and play a more active role in world economy, said CPPCC National Committee member Guo Guoqing, a professor with the Renmin University of China based in Beijing.

Guo suggested China use part of its trade surplus to import technologies and resources.

More than 2,200 CPPCC National Committee members are expected to gather for the Fifth Session of the 10th CPPCC National Committee that will last 12 days.

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