China's forex reserves swell to more than $3 trillion

China's foreign exchange reserves swelled by $197.4 billion to $3.0447 trillion in the first quarter of 2011 (April-March), helped by large inflows of foreign funds and further increasing pressure on the government and the central bank to tighten monetary policy.

The $197.4 billion increase comes despite a small deficit in China's trade in the first quarter of the current year (January-March 2011). However, foreign direct investment inflows added $50 billion to $70 billion to the country's foreign exchange reserves.

A decline in the value of the US dollar might also have helped boost the value of China's non-dollar holdings.

Meanwhile, Chinese banks extended 679.4 billion yuan ($104 billion) in new yuan loans in March, against 535.6 billion yuan in February, data provided by the People's Bank of China showed.

Money supply in China rose 16.6 per cent year-on-year, threatening to aggravate the nation's inflation woes and trigger more policy tightening.

The increase comes despite several bouts of interest rate hikes by the People's Bank of China in more than a year.