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China’s foreign exchange reserves in foreign sovereign debts

China is estimated to have invested about 60 percent of its foreign exchange reserves in foreign sovereign debts, a financial expert said Friday.

Dong Tao, Credit Suisse’s chief regional economist for Asia excluding Japan, said the Chinese central bank has invested an estimated US$ 1.8 trillion in government bonds and similar sovereign bonds overseas, including U.S. Treasuries securities and European countries’ government bonds.

By the end of 2011, China’s foreign exchange reserves registered a total of $ 3.18 trillion, up 11.5 percent from $ 2.85 trillion a year earlier.

In 2006, China surpassed Japan to become the world’s largest holder of foreign exchange reserves.

The robust growth in Chinese foreign reserves was attributed to large trade surpluses, strong foreign investment and inflows of short-term speculative funds in search of quick profits.

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