Top > Business > 2007 > January > 2007-01-07

China to Use Foreign Exchange Reserves to Strengthen Resources

The daily newspaper China Business News reported that Deputy Prime Minister Zeng Peivan, told the leaders of the national legislator that the government intends to use the country`s huge foreign exchange reserves to develop key resources, such as, oil, natural gas and coal, in addition to strengthening the country`s strategic resource base.

The reports didn`t indicate how China plans to use these funds, as the government cannot use these currencies directly as they belong to the country`s central bank. Economists say that the Chinese government could issue long term bonds, thus attaining access to the money. Zeng said that China has weak resource base, relative to its huge 1.3 billion person population. He said that China holds about 12% of the world`s known reserves of resources, and is positioned in third place after the United States and Russia. He also added that in certain resources were China`s needs are great the demand outweighs the supply, a situation which worries many of China`s communist leaders that view China`s self-sufficiency as a strategic preference. China`s President has recently spoken on the importance of conservation of resources and the environment.

Zeng said China would expedite the development if natural gas and oil fields, lately discovered in China`s coast, in order to increase the country`s oil and gas output. He also reported that 8 new oil fields have been discovered with reserves of more than 700 million barrels. Zeng boasted that in the past 5 years China`s coal and iron output has doubled.