Yin said there were still many areas for improvement in China before the yuan would have a global reach. One really pressing area, he said, was to make the economy more domestically driven. Declining exports could produce a deficit in the current account.

China must rebalance

The United States hadn't forced China to accumulate such a huge US dollar stockpile, so it was up to China to reduce its reliance on exports as a source of growth and keep foreign reserves at a balanced level, said Yin.

In addition, China lacked the kind of deep financial markets that could supply varied derivative products, which made yuan less appealing, Yin said.

He also noted that economic and military muscle were, as always, the fundamental factors behind having a strong reserve currency.

Zuo Xiaolei, chief economist with Galaxy Securities, said China did not actually have many choices at present, since few investments were likely to show easy profits given the current global economic downturn.

"Political and economic ties bind China and the United States together; they are in the same boat," she said.

(Xinhua News Agency April 8, 2009)