China may move away from dollar reserves

The government’s foreign exchange regulator indicated it may diversify its huge foreign currency holdings � which are growing at about US$15 billion a month, reaching nearly US$800 billion by the end of 2005 � away from US dollar and government bonds. With an estimated 70% of Chinese reserves invested in US dollar assets, the switch could put significant downward pressure on the dollar. Meanwhile, US Treasury Secretary John Snow repeated his call for China to allow the yuan to rise against the dollar but warned against retaliatory trade measures. "We’re not satisfied one bit on the currency issue, but it’s awfully important we resist these protectionist pressures," he said.