MercoPress. South Atlantic News Agency

China confirms international reserves above a trillion dollars

China's foreign currency reserves stood at more than one trillion US dollars by the end of 2006, according to official figures from the country's Central Bank.

Reserves increased by 78.4 billion US dollars in the last three months of last year, marking 2006's biggest quarterly leap. Overall 2006 reserves were 30.22% above those at the end of 2005. According to Chinese statistics, when the country begun its economic reforms in 1979, reserves stood at one million US dollars. China's reserves have grown as the central bank has bought US dollars to hold down the Yuan's value, which has made China's exports more competitive. Separate data showed foreign direct investment was 5% up on 2005, the official Xinhua news agency said. Stripping out investments in the financial sector, foreign direct investment (FDI) totaled 63.02 billion in 2006, a 4.47% rise from 2005, according to the Commerce Ministry. China's economic growth makes it increasingly attractive to outside investors. China's exports last year jumped 27.2% reaching 969 billion US dollars with imports growing 20% to 791 billion US dollars with an overall surplus of 177 billion. Also in 2006 China faced 86 dumpling claims from 25 countries, a third more than in 2005. The country's foreign reserves now stand as the largest pool of foreign currency worldwide. The increase in reserves may give more ammunition to those who argue that China's currency policy, by keeping the Yuan artificially weak, gives Chinese firms an unfair advantage, especially over US companies. While the exact composition of China's reserves is unknown, many think about 70% are in dollar-denominated bonds.