That is one way of saying that China has started looking for alternatives to the dollar.
The dollar fell the most since September against the currencies of its six biggest trading partners after Chinese officials signaled plans to diversify the nation’s $1.43 trillion of foreign exchange reserves.
[…] “We will favor stronger currencies over weaker ones, and will readjust accordingly,” Cheng Siwei, vice chairman of China’s National People’s Congress, told a conference in Beijing. The dollar is “losing its status as the world currency,” Xu Jian, a central bank vice director, said at the same meeting.
[…] Chinese investors have reduced their holdings of U.S. Treasuries by 5 percent to $400 billion in the five months to August. China Investment Corp., which manages the nation’s $200 billion sovereign wealth fund, said last month it may get more of the nation’s reserves to invest to improve returns.
“The world’s currency structure has changed,” Xu said at the conference in Beijing. Cheng, speaking to reporters after his speech, said his comments don’t mean China will buy more euros. The National People’s Congress, China’s legislature, isn’t involved in setting currency policy.
“Cheng has a history of speaking out on a range of financial market and economic developments, and his comments are not always accurate,” said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.
Cheng’s remarks on Jan. 30 that China’s stock rally was a “bubble” caused the benchmark index to fall the most in almost two years the following day. The Shanghai and Shenzhen 300 Index, then over 2,500 points, has since climbed above 5,300.
I feel like I ought to be worried about this, but I also feel as though I don’t know enough about the situation to comment authoritatively. Let’s split the difference – I put the story up and better informed readers can hash out what it means in the comments.