China's rapid rise in foreign exchange reserve, which grew by US$116.8 billion to US$403.3 billion in 2003, was the outcome of the sound economic performance instead of being preset by the Chinese government, said officials in Beijing Sunday.
On China's forex reserve, Guo Shuqing, director of the State Administration of Foreign Exchange (SAFE), said it could not be said to be "excessive" or "deficient".
A nation's foreign exchange reserve epitomizes the state of its balance of international payment, and the result of its macro-economic performance and, therefore, it is usually hard for the government to set targets for its reserve, he explained.
The increase in China's foreign exchange reserve, he noted, is attributable to numerous domestic and overseas factors as the country records continued surplus in international payments.
Chinese officials last week rejected warnings by US Federal Reserve Chairman Alan Greenspan that China faces grave economic consequences if the country continues to pile up massive US dollar holdings as it defends the pegged yuan system.
Guo, also a member of the National Committee of the Chinese People's Political Consultative Conference, told reporters that officials of the Republic of Korea said after the Asian Financial Crisis in late 1990 the more the forex reserve a country held, the better.
"Provided China was in a serious financial crisis," he said, "the country would need perhaps several hundred billion US dollars, as tens of billions US dollars (in emergency aid) is not adequate as its economic scale is very big."
There is no such a lender under the current international financial system that can provide such a huge amount of money, China must hinges on its self-reliant efforts, he said.
There is no unified benchmark on the appropriate amount of forex reserve a country should hold in both theory and practice, he noted.
The director said developing countries have increased their forex reserves since the 1997 Asian Financial Crisis.
"The Republic of Korea, Indonesia, Thailand, Malaysia and the Philippines have increased their forex reserves by US$160 billion over 1997."
China maintains the forex reserve mainly for the purpose of guarding against international financial risks, ensuring the balance of international payments and safeguard security of the national economy.
As a large developing country at the stage of fast economic growth and transition of economic restructuring, sufficient forex reserve will raise China's capability of international settlement and protect the credibility of both the country and its companies, and improve overseas confidence of the Chinese economy and currency, Guo said.
(Xinhua News Agency March 8, 2004)