“We provided abundant liquidity [for the country] to cope with the crisis and at the same time we also made some profits,” he said, without elaborating.

However, he warned that the financial crisis has not yet bottomed out and its negative impacts would continue to be felt, possibly affecting China’s forex investments.

“China holds nearly US$2 trillion in foreign exchange reserves that is [exposed] to the international market. It certainly faces grave challenges.”

Asked whether China will continue to buy US treasury bonds after President Barack Obama signed a $787-billion bill to rescue the US economy, Fang would not specify, but called for measures to protect such investments.

“We hope major reserve currency economies will take active steps to effectively tackle the financial crisis and economic recession … and protect investors’ rights and interests and boost their confidence,” he said.

China overtook Japan as America’s biggest foreign creditor in September and as of October held $652.9 billion in US Treasury bonds.

Its forex reserves were $1.95 trillion by the end of 2008.

Source: AFP