From the BusinessWeek (link)
Just how big can China get? For one thing, it looks as if the Middle Kingdom may now have greater foreign-currency reserves than any other country. On Mar. 28, the state-run China Business News reported that the mainland’s reserves hit $854 billion in February, outstripping Japan’s reported stockpile of $850 billion.
Although China’s central bank declined to comment on the report, it’s sure to push the mainland’s currency policies even further into the spotlight. After all, China’s swelling foreign reserves are a direct by-product of all those sneakers, DVD players, and bedroom sets that consumers worldwide — and especially in the U.S. — can’t resist buying. One reason they look so attractive is their low price, something many in the U.S. blame on an undervalued yuan.
That served as the focus of the visit to Beijing last week by U.S. Senators Charles Schumer and Lindsey Graham. The pair is proposing a 27.5% tariff on all Chinese exports to the U.S., and has threatened to force a vote on the issue in the Senate by Mar. 31 unless Beijing starts to allow the yuan to move toward its real market value. Currently, the yuan trades at around 8.0275 bid vs. dollar.