China on Monday reported that its foreign currency reserves swelled by more than one-third last year to a record $819 billion as its factories churned out goods for markets around the world, heightening the likelihood of fresh trade tensions with the United States.
Coupled with news only days earlier that China’s world trade surplus tripled last year to $102 billion, the country’s burgeoning foreign exchange reserves seemed certain to intensify demands that China increase the value of its currency, the yuan, whose worth is linked to the dollar. Manufacturing groups in the United States argue that China’s currency is priced too low, making its goods unfairly cheap on world markets. Lawmakers in Congress have pressed a bill that would impose across-the-board punitive tariffs on all Chinese goods unless the country substantially raises the value of its currency.
See also “Is China accumulating too much foreign cash?” from the International Herald Tribune.