China's foreign-exchange reserves will "hopefully" reach US$2 trillion this year, National Bureau of Statistics chief economist Yao Jingyuan said.

Yao spoke in a telephone interview with Bloomberg News after earlier being cited in news reports as saying at a Beijing forum that the reserves had already climbed to that level. He said he had been misunderstood.

Trade surpluses helped to swell the reserves, the world's biggest, to US$1.9 trillion at the end of September, according to the central bank. Larger reserves would strengthen the nation's finances as the government boosts spending and cuts interest rates to counter the financial crisis.

The Peoples Bank of China cut rates on Wednesday by the most in 11 years, less than three weeks after the government announced a 4 trillion yuan (US$586 billion) stimulus plan. Premier Wen Jiabao is trying to prevent a deeper slowdown in the world's fourth-biggest economy as construction slumps and exports wane.

China reported a record US$35.2 billion trade surplus last month. The reserves have increased 14 times in size in the past decade, according to government data. They topped US$1 trillion in 2006.

Standard & Poor's cited the reserves and the nation's "strong fiscal position" when it upgraded China's long-term debt rating to A on July 31.

Yao quoted the US$2 trillion figure while arguing that China was stronger than when the Asian financial crisis hit in 1997 and 1998.

The reserves, along with high levels of savings by Chinese households, will help the nation to weather the crisis, bureau spokesman Li Xiaochao wrote in a report published yesterday on the finance ministry's Website.

(Shanghai Daily November 28, 2008)