China Should Buy More Gold: Newspaper

China should buy more gold with its foreign exchange reserves, an official newspaper said.

China should buy more gold with its foreign exchange reserves, an official newspaper said in a commentary on Monday.

The China Securities Journal said gold accounted for only 1.3 percent of China's foreign currency reserves, which hit a world record $875.1 billion at the end of March.

In rich countries, by contrast, gold makes up 50 percent to 60 percent of reserves, it said.

Worries about the momentum of the U.S. economy; fears among financial experts that the dollar is on a long-term depreciating trend; doubts that the euro can replace the dollar as a major reserve currency; and concern that overseas demand for U.S. Treasury securities is drying up -- except on the part of China -- were all reasons why China should buy more gold, the paper said.

Against this background, gold was playing a much more important role in the global monetary system, it said.

"It would be a wise step for China to appropriately increase its gold reserves," said the China Securities Journal, which is owned by Xinhua, the state news agency.

It cited Russia and South Korea as examples of countries that had switched part of their reserves out of dollars and into gold.

The paper recalled a recent recommendation by an expert at the Beijing Gold Economy Development Research Centre that China should quadruple its gold reserves to 2,500 tonnes from 600 tonnes now.

"China should raise its gold reserves so those reserves can account for 3 percent to 5 percent of the foreign exchange reserves, instead of current 1.3 percent," the China Gold newspaper on May 9 quoted Liu Shanen as telling a conference.