I asked Cullen Roche (http://pragcap.com/ http://pragcap.com/), and this is what he said: "China's USD reserves are a function of their trade surplus with the

I asked Cullen Roche (http://pragcap.com/ http://pragcap.com/), and this is what he said: "China's USD reserves are a function of their trade surplus with the USA. If they don't want to accumulate USD then they should allow their currency to rise and start consuming more goods domestically while producing fewer goods for the USA. But they don't want to do that because they have a growth target to meet and their export growth to the USA plays a large role in that target. So, their accumulation of reserves and US tsys is a function of their desire to export goods and services to the USA. If they want lower growth then they can stop accumulating USD's. But that isn't going to happen unless they find growth elsewhere...Being the largest economy in the world means they will remain a huge exporter to the USA."