A Warning?

From yesterday's China Daily, courtesy of Reuters:

China should reduce the dollar share of its foreign exchange reserves because of the risks posed by the instability of the U.S. currency, influential economics professor Xiao Zhuoji said in an interview published on Monday.

Speaking to the Shanghai Securities News, Xiao also proposed a number of ways to slow the explosive growth in China's reserves, which rose 34 percent last year to $818.9 billion.

"Dollars account for most of our reserves, and the instability of the dollar increases foreign exchange risk. So we should take measures to cool down this extraordinary reserve growth," the paper quoted Xiao as saying.

He proposed adjusting the structure of China's reserves to reduce currency risk but did not elaborate.

Xiao is a Peking University professor and a member of the standing committee of the Chinese People's Political Consultative Conference, a body that advises the National People's Congress, or parliament.

The congress convenes on Sunday for its annual session.