The First Finance Daily reports that the data released by the Central Bank of China last Friday shows by the end of last month, China's foreign exchange reserve amounted to 875.07 billion US dollars, keeping the first place globally since the end of February when China surpassed Japan by having 853.67 billon US dollars of foreign exchange reserve for the first time. According to the data released by Japanese financial province, its foreign exchange reserve was 852.03 billion US dollars by the end of March.

China's 875.07 billion US dollars of foreign exchange reserve at the end of March was 32.8 percent more than the same period last year; while the increase of foreign exchange reserve totaled 56.2 billion dollars in the first three months, 7 billion US dollars more than the same period of 2005.

As the main source of foreign exchange reserve increase, trade surplus and inflow of FDI, have also seen high growth in the first quarter. The data released by Ministry of Commerce and the General Office of Customs shows that in the first quarter the inflow of FDI was 14.246 billion US dollars, and the trade surplus 23.31 billion.

Judging from the trade surplus and the inflow of FDI, Wang Zhihao, senior economist of Standard Chartered Bank, said the foreign exchange reserve in China would probably break through one trillion US dollars by the end of the year at the present speed.

According to the monthly increase data, the foreign exchange reserve increased by 21.4 billion US dollars in March , 26.31 billion in January and 8.49 billion in February.

The foreign exchange reverse in the Chinese mainland got the lowest increase in February since September 2003, while East Asian countries and regions such as Japan, South Korea, Taiwan and Hong Kong had negative growth. However, when the foreign exchange reverse in the Chinese mainland increased by a large margin in March, Japan and Korea saw increase to a new high and Hong Kong and Taiwan also achieved positive growth. The increases between Chinese mainland and the East Asia Economic System seem to be interlinked.

Data released by the Central Bank of China during the same period shows by the end of March, the gold reserve in China had been 19.29 million ounce, keeping unchanged for 40 months since December,2002. The Central Bank of China increased gold reserve twice at the end of 2001 and 2002 respectively. The yearly statistics also show the last adjustment of gold reserve was in December, 2002, when the gold reserve increased to 19.29 million ounce from 16.08 million. Before that, the gold reserve increased to 16.08 million ounce from 12.67 million in December, 2001.

Calculation shows gold reserve in the Central Bank increased by 6.62 million ounce at the end of 2001 and 2002. But there was no adjustment of gold reserve from 1999 to December,2001.

At present, many economists appeal for increase of gold reserve so as to alleviate the burden of the increasing foreign exchange reserve and realize the diversification of foreign exchange reserve.

By People's Daily Online