Zhou Xiaochuan, Governor People's Bank of China

China's Central Bank Governor Zhou Xiaochuan said on Monday that while there might be some speculative funds betting on the yuan appreciation, or the so-called "hot money" flowing into China, the amount was not significant.

The reason is that China implements foreign exchange controls to some extent, Zhou Xiaochuan told a press conference during the annual session of the National People's Congress, China's parliament, according to Xinhua, the State news agency.

China's foreign exchange reserves, which grew to US$609.9 billion in 2004 -- second only to Japan -- consists largely of trade surpluses, non-trade surpluses and capital investment from overseas, Zhou said.

Zhou said that foreign exchange reserves should be denominated in a number of currencies (instead of the US dollar alone) and comprise diversified products in a bid to reduce,  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 Governor of the People's Bank of China said.

State banks to go public soon

According to Xinhua, Zhou also announced that the planned share-offerings and listings of State-owned Bank of China (BOC) and China Construction Bank (CCB) are "not too far away".

The banks' stock market floatatios should be decided by their boards of directors and depend on whether there are "windows of opportunity" on the capital market, Zhou told the press conference.   

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China rules out sharp rise in yuan