China should slash its dollar-denominated foreign exchange reserves to $1.3 trillion from current levels of around $3 trillion and diversify its holdings, says Tang Shuangning, chairman of China Everbright Group, a financial institution.

Tang's comments echo those of Zhou Xiaochuan, governor of China's central bank, who has said that China's foreign exchange reserves "exceed our reasonable requirement," according to Chinese newswire Xinhua.

Other high-ranking Chinese officials have called for similar measures.
Xia Bin, a member of the monetary policy committee of the central bank, says $1 trillion is a sufficient for the country's reserves, adding that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

President Barack Obama and Chinese Premier Wen Jiabao (L) (Getty photo)

Washington accuses China of manipulating its currency to give the Asian giant an unfair advantage in the global trade arena.

The International Monetary Fund says Beijing's currency controls are hampering global recovery.

"The currency of China still appears substantially weaker than warranted by medium-term fundamentals," the IMF says in a report, according to the Associated Press.

Chinese public-sector economists agree that a stronger yuan is needed, if not for the global economy at least for the Chinese economy.

"A moderate acceleration in the yuan’s appreciation would help China effectively deal with imported inflation," says Ba Shusong, a researcher at the State Council’s Development Research Center, according to Bloomberg.