Bill Bonner: A goldbug''s life is always to deny that there''s a free lunch

Section:

By The Associated Press
Friday, December 10. 2004

http://www.forbes.com/business/businesstech/feeds/ap/2004/12/10/ap1703
982.html

The agency that maintains China's US$540 billion
in foreign reserves denied Friday that it has
reduced its holdings of U.S. dollar-denominated
assets, rejecting what it said were unfounded
foreign news reports.

Dollars are believed to account for up to 80 percent
of China's foreign reserves.

The dollar's recent plunge prompted China's central
bank to boost dollar buying, sparking speculation that
Beijing might look to shift some of its reserves to a
stronger currency.

"We will not readjust the currency makeup of the
foreign exchange reserves simply because of
short-term market fluctuations," said a spokesman
for the State Administration of Foreign Exchange,
quoted by the official Xinhua News Agency.

The spokesman, whose name wasn't given, "denied
reports by foreign press that China has reduced
large amounts of its foreign exchange reserves in
the U.S. dollar, saying that the reports are totally
groundless," Xinhua reported.

It didn't specify which foreign news reports it was
denying.

A Chinese newspaper reported in November that
Beijing was reducing its massive holdings of U.S.
Treasury bills because the fall in the dollar was
hurting their value.

The article cited Yu Yongding, an adviser to the
Chinese central bank's monetary policy committee.
Yu later said his comments were based on data
from the U.S. Federal Reserve and not any inside
knowledge of China's reserve management.

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