A senior official in the Chinese Communist Party is advising the government to use some of its forex exchange reserves to buy overseas energy and mining assets while the international oil prices are fluctuating so badly.  According to Li Lianzhong, the head of the economic department in the Policy Research Office, “The value of China’s foreign exchange reserves has shrunk badly because of US dollar depreciation and in the meantime spending lots of dollars purchasing crude oil at very high prices.  We should encourage our companies to purchase overseas mines and oil fields, changing foreign exchange reserves into resources reserves.”

China, like many other countries worldwide, is feeling the stress of the unstable international economy.  Lianzhong feels that by converting their assests will help China’s stable economic growth remain stable and give the yuan exchange rate more flexibility.  Two-thirds to three-quarters of the reserve pile is believed to be wrapped up American dollar assets with the majority of it being in government or quasi-governmnet debt.