Several banking officials in China, have stated that they Chinese government needs to “reduce” and “diversify” their foreign currency holdings.

Tang Shuangning, chairman of China Everbright Group said China must reduce its excessive foreign exchange reserves and further diversify its holdings.

Zhou Xiaochuan, governor of China’s central bank, said that China’s foreign exchange reserves “exceed our reasonable requirement”.

Xia Bin, a member of the monetary policy committee of the central bank, said China should further diversify its foreign exchange holdings.

According to western media reports, most of China’s foreign currency holdings are in U.S. dollars.  This is part of why the value of the U.S. dollar hasn’t dropped as far as it should have.  But if the Chinese government listens to its bankers, then the dollar could crash.

When the Chinese bankers say China must reduce its current foreign currency holdings they’re talking about U.S. dollars.  They’re saying the Chinese government has too many, based on how bad the U.S. economy is.

When the Chinese bankers say they want the Chinese government to diversify foreign currency holdings, they mean they want to get rid of U.S. dollars and buy money from countries that have good economies, like Russia, India, South Africa and several South American countries.