China Business News reported that according to statistics published by the Central Bank, China's foreign exchange reserves were US$875.07 billion by the end of March 2006, maintaining the No. 1 spot in the world.

As the main sources of foreign exchange reserve growth, trade surplus and foreign direct investment (FDI) inflow both saw a rapid increase in the first quarter. The Ministry of Commerce and the General Administration of Customs recently published statistics, showing that in the first quarter, FDI inflow reached US$14.246 billion and trade surplus stood at US$23.31 billion.

Based on the current growth rate of trade surplus and FDI inflow, Standard Chartered Bank China's senior economist Wang Zhihao estimated that China's foreign exchange reserves would be likely to break through US$1 trillion by the end of this year.

At the same time, statistics from the Central Bank indicate that by the end of this March, China's gold reserves were 19.29 million ounces, keeping unchanged for 40 months since December, 2002.

At present, many economists appeal to increase of gold reserves in order to alleviate the pressure of rapid growth of foreign exchange reserves and realize diversification of foreign exchange reserves.