BEIJING (AP) - China's foreign reserves have surged past $3 trillion, driven by currency controls that Washington and other governments complain are distorting trade and hampering a global recovery.
Chinese reserves, by far the world's biggest, soared 24.4 percent over a year ago to $3.04 trillion at the end of March, the central bank reported Thursday.
The reserves are the result of Beijing's massive purchases of dollars and other foreign currency to restrain the rise of its yuan as export revenues and investment pour into its economy. In freer trading, that flood of cash would push up the yuan, making Chinese exports more expensive abroad.
Washington and other governments want an end to the controls, which they say give China's exporters an unfair price advantage. They say that swells its multibillion-dollar trade surplus and hurts foreign competitors at a time when other countries are struggling to create jobs following the global crisis.
The International Monetary Fund added to pressure this week for Beijing to ease the controls that fuel of the growth of its reserves, citing them as a factor that might hamper a global recovery.
"The currency of China still appears substantially weaker than warranted by medium-term fundamentals," the IMF said in a report.
It said that unless Beijing allows a more market-driven exchange rate, "the recovery will stand on increasingly hollow legs over the medium term."
Some U.S. lawmakers want sanctions on China if Beijing fails to act. Pressure for such action abated while the two governments cooperated to end the global crisis but demands have revived as trade recovers.
Many economists expect Beijing to let the yuan rise faster to cool inflation that hit 4.9 percent in February and is believed to have accelerated in March. A stronger yuan would make imported oil and other foreign goods cheaper, easing pressure for prices to rise.
But officials including Premier Wen Jiabao have ruled out a rapid increase, saying that might hurt Chinese companies and cost jobs, adding to social tensions.
The yuan, also known as the renminbi, has been allowed to rise by 4.5 percent against the dollar since June, when Beijing promised more exchange rate flexibility. But in a report in February, the U.S. Treasury complained the pace of revaluation is too slow. It said more rapid appreciation was required.
China's reserves are nearly triple those of second-place Japan, which reported $1.1 trillion as of March 31.
The makeup of China's reserves is secret but Beijing is believed to keep more than half in Treasury securities and other U.S. government debt.
That has helped to finance Washington's budget deficit but fueled anxiety among Chinese officials about the safety of their holdings. They have repeatedly appealed to American leaders to avoid steps in response to the global crisis that might erode the value of the dollar and China's U.S. assets.
The government has diversified its holdings in recent years, trying to earn a better return by putting some of its reserves into agencies that invest in stocks and other foreign assets.
People's Bank of China (in Chinese):