Yu Yongding: China’s should Diversify Foreign Exchange Reserves to Guard Against a Weaker Dollar

On July 8, Yu Yongding, , academicianof Academy of Social Sciences said at  the 16th International Economic Association Congress that China’s debt and the currency structure of debt need to be adjusted. China should diversify $ 3 trillion foreign reserves, according to Xinhua News Agency .

Yu said the U.S. debt  and the debt ratio against GDP growth is rising, which means that the financing difficulties faced by the United States will unstabilize the global economy, U.S. assets becomes more and more unsecure.

Yu Yongding said that from 1929 to 2009, the purchasing power of US dollars depreciated by 94%.

In addition, Yu Yongding also mentioned that China should not maintain a large trade surplus. “it is ok to have a trade surplus,  but in the capital account,  a lot of surplus means danger, the two surplus  together would increase the amount of China’s foreign exchange reserves, which are detrimental to China.”

Caijing

 Translated and edited by Peng Bo. He is now an editor of m4.cn. Write to him at pb.bloomberg@gmail.com.

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