2008, the central bank of China has lowered benchmark interest rates five times
and deposit reserve ratio four times, aiming at maintaining adequate liquidity
in the banking system and promoting the steady growth of money supply and
Fourth, focus on promoting employment and improving people’s livelihood,
increase subsidies and concessions to agriculture and farmers, thereby aiming at
expanding domestic consumer demand.
Fifth, promote the transformation of value-added tax and oil tax and other
key reform areas and crucial links in the medical and health institutions.
In the international arena, in conformity with a responsible attitude, China
has strengthened cooperation and coordination with international community and
has made positive contributions to stabilize the global economy and finance.
Despite of enormous difficulties, China has kept RMB exchange rate basically
stable, signed bilateral currency swap agreements amounting to 650 billion yuan
with the relevant countries and regions, actively participates in IFC trade finance
program, and has afforded support to the capital (quota) increase program of the
International Monetary Fund.
China is now the largest overseas holders of U.S. treasury bill and bonds. Data
of the U.S. Treasury Department show that, by the end of April 2009, China’s
holdings of U.S. Treasury bonds amounted to 763.5 billion U.S. dollars, a sharp
increase of 261.5 billion U.S. dollars compared with the figure of April 2008.
Because U.S. government bonds are guaranteed by the U.S. government’s credit
and revenue, its credit rating is relatively high and it remains a good investment
channel for China. The facts can not be changed in a short period that China
The Global Financial Crisis and the Role of China
will hold increasing amount of foreign exchange reserves and that the US dollardenominated
assets will maintain its strong international status. Therefore, it is an established trend that China will increase its holdings of U.S. treasury bonds.
However, the current dollar policy adopted by the US can be characterized as a
dollar depreciating (weak dollar) policy. This constitutes a serious concern for
China and other developing countries. Thus, it is understandable that sometimes
China may reduce a certain amount of U.S. dollar assets.
At this crucial moment of the crisis and as one of the world’s largest trading
nation, China resolutely opposes any forms of trade protectionism and protective
measures. Together with other countries, China strives to maintain an orderly