There might be some speculative funds betting on the yuan appreciation, or the so-called "hot money" flowing into China, but the amount was "not big", central banker Zhou Xiaochuan said in Beijing Monday.
  
The reason is that China now still implements foreign exchange controls to some extent, he told a press conference during the annual session of the National People's Congress.
  
China's forex reserve, which rocketed to US$609.9 billion -- second only to Japan -- at the end of 2004, consist largely of trade surpluses, non-trade surpluses and capital investment from overseas, said Zhou, governor of the People's Bank of China.
   
As a matter of fact, the reserve started to surge not in 2004, but as early as 2002, on the backdrop of China's economic start-up following the Asian financial crisis, he said.
  
Forex reserve should be denominated in a number of currencies (instead of the US dollar alone) and comprise diversified products in a bid to award off risks, Zhou said in reply to a German reporter's question on whether China would hold more euro-denominated assets.
  
"We have long attached importance to the holding of a certain amount of euro assets," the central banker said.

(Xinhua News Agency March 7, 2005)