Sourcing, Piping a Torrent of Forex Reserves

A sharp increase in China's foreign exchange reserves at the beginning of 2010 after a slowdown in late 2009 has led to heated discussions over the sources and motivations behind this erratic cash influx.

The debate grew from complex signals tied to forex data released in January by the State Administration of Foreign Exchange (SAFE) and the People's Bank of China. On one hand, the data showed, China added US$ 453.1 billion in forex reserves in 2009.