Yi Gang, head of the State Administration of Foreign Exchange (SAFE) is being quoted on Reuters as saying that the Chinese FX reserves are suitably diversified and are not used for short term speculation (yeah, sure).

Also of interest is that non-state gold holdings now exceed 3000 tonnes but China faces some constraints in adding to this amount. Gold price will rise if China buys, he adds.

US Treasuries still play a vital role in China’s management of its FX reserves.