economy - China keeps on paying for US debts

China will not sell off its reser es in US-dollars despite a falling exchange rate, Guo Shuqing, director of the State Admininistration of Foreign Exchange, said this weekend, according to the New York Times. Rumors about China getting a more balanced foreign exchange mix has put the US-dollar more under pressure in the recent months.

'The denial comes as Chinese media worry about the damage done to China's
financial stability,' the article says.
'Mr. Guo appeared to be trying to address an undercurrent of popular dismay
in China over the rapid accumulation of dollar-denominated assets even as the
dollar has weakened. Chinese media have published numerous articles in recent
months asking if the country has lost money by investing so heavily in dollars.
The official New China News Agency on Sunday carried a rare defense of
Chinese currency policies by Mr. Guo. "We will not adjust the structure of our
foreign exchange reserves according to short-term fluctuations," he was quoted
as saying Saturday on the sidelines of a meeting of the Chinese People's
Political Consultative Conference, an advisory group. "If we sell U.S. dollars
now when it is tumbling, it means we lose money. If we do sell them, we have to
buy other currencies such as the euro. But what if the euro drops?"'