While at the G-20 meetings in London, on Wednesday, April 1 President Obama will have one-on-one meetings with Chinese leader Hu Jintao, Russian President Dmitry Medvedev, British Prime Minister Gordon Brown and Britain's Queen Elizabeth II.
On Thursday, he will meet King Abdullah bin Abdul Aziz Al Saud of Saudi Arabia, Prime Minister Manmohan Singh of India and President Lee Myung-bak of South Korea.
How the Chinese may change their foreign exchange reserve structure is here:
ReplyDeletehttp://www.chinadaily.com.cn/bizchina/2009-03/23/content_7606210.htm
Given the source, I assume it's been vetted. Excerpt:
"China should also make efforts to increase its commodity assets and reduce its foreign exchange reserve assets in its international reserves. The international crude oil price has plummeted from nearly $150 a barrel at the highest to around $40 now. Gold, which once topped $1,000 an ounce, has come down to about $900 per ounce. Under such circumstances, China should buy crude and gold assets. Because of the negative correlation between the prices of gold and the US dollar, many countries, in the developed world in particular, have already moved to increase their gold reserves. By contrast, China's gold reserve, which stands at 600 tons, only occupies 1.1 percent of its international reserves, far lower than the world average of 10.2 percent.
As the yuan is not fully convertible, nor is it an international settlement currency, China may consider the following two means to help resolve the huge pressure to appreciate the yuan caused by the country's huge foreign exchange reserves.
First, China should continue to encourage foreign financial institutions to issue yuan bonds. They can use the funds raised on the bond market to buy US dollars from the Chinese central bank. Apart from the benefit of lending US dollars to foreign investors, such an arrangement can also lower investment risks, especially the exchange rate risk, compared with buying US Treasury bonds.
Second, Chinese commercial banks should be allowed to extend yuan loans to foreign banks, which in turn can use the borrowed money to buy US dollars from China's central bank and pay back the principal and interest later on an annual basis. Both arrangements will be conducive to the process of turning the yuan into an international currency that is fully convertible."