China forced to support dollar to make yuan

http://english.pravda.ru/business/finance/01-06-2009/107655-china_dollar-0

China is uncomfortable about being the principal creditor of the United States. Asia’s largest nation became the hostage of the US economy in the 21st century. The reserves of the People’s Republic of China are based on dollar assets - $2 trillion. US Treasury Bonds make $700 billion of the amount. China is forced to continue crediting the budget deficit of the United States not to let these reserves go down in value.







However, China has been taking measures to overcome its dollar dependence. The head of the Chinese Central Bank put forward a suggestion in March of the current year to replace the dollar, as the international reserve currency, with the basket of currencies, which would be determined by the International Reserve Fund.

The most ambitious project is this direction is to grant the Chinese yuan the status of the reserve currency. Western observers were quite skeptic about such an idea. China would have to turn the yuan into a convertible currency, the rate of which would be determined by the market.

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as the dollar dives so does China's assets

but the Chinese economy would tank as the value would soar. Not going to happen anytime soon.