China’s forex reserves up at record high of $2.8 trillion

Shanghai: China on Friday revised upwards its foreign exchange reserves for 2010, saying it expanded $469.6 billion, higher than the $448.2 billion reported in January. According to the annual report of the State Administration of Foreign Exchange (SAFE), these revised figures bring China's total forex reserves at the end of 2010 to a record high of $2.869 trillion, as compared with previous estimates of $2.847 trillion.

China already holds the highest forex reserves in the world.

China's massive trade surplus is a major irritant in its ties with other countries, notably the United States.

Under considerable pressure to stop manipulating the value of its currency China has moved at a snail's pace to strengthen its value and also take other measures that have seen its trade surplus with other nations narrow somewhat for the second straight year in 2010.

Beijing's huge undervaluation of the value of its currency, the yuan, gives its exporters an unfair trade advantage.

SAFE said it expected the trade balance situation to continue to improve in 2011.

"The restructuring of China's economy is accelerating and domestic consumption will gradually become a major driver of economic growth. The trade balance situation may improve," it said in the report.

"We need to closely monitor cross-border capital flows to deter inflows of hot money," it added, referring to speculative funds coming into the country attracted by the nation's rising interest rates and strong currency.