January 17, 2005 – China’s foreign currency reserves jumped to a record $819 billion last year, paving the way for increased pressure on China to further revalue their currency. Analysts expect China’s currency reserves to top $1 trillion in 2006, likely making them the biggest holder of foreign currency.
Despite being undervalued by up to 40 percent, China revalued the yuan by a mere 2.1 percent in July, temporarily easing trade tensions with the U.S. However, the continued loss of manufacturing jobs and a skyrocketing trade deficit has led lawmakers to increase pressure on China to further strengthen their currency.
China also announced their trade surplus tripled to $102 billion in 2005, drawing criticism from the China Currency Coalition, who contend China’s surplus is actually closer to $435 billion.
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