The power of China's huge foreign exchange reserves, which stand at nearly US$2 trillion, might start to be felt more around the world as the country seeks to use those funds "more actively" as the global economic crisis grinds on, experts told Xinhua.

"The government has sent clear signals," said Yin Jianfeng, deputy director of the Institute of Finance and Banking of the Chinese Academy of Social Sciences, a governmental think tank.

He said Beijing was likely to shift its strategy from passive to active reserve management, a change he said was especially urgent and an obvious response to the financial crisis.

Premier Wen Jiabao said in an interview with the Financial Times during the Davos Forum that the country was exploring more efficient ways to use its reserves to boost domestic development.

China's reserves hit a record US$1.95 trillion at the end of 2008, the largest in the world and far exceeding those of Japan, the second-largest foreign exchange holder with US$1.03 trillion.

To play it safe, China's huge reserves have usually been invested in low-risk but low-yield assets, such as US government bonds.

According to the US Treasury, China held US$681.9 billion worth of US government bonds as of November.

China should find new ways to use these funds more efficiently, get a higher return and support domestic development, said Yin.

The government has long sought to diversify the use of its reserves as part of a larger reform drive.

"We hope to use the money to buy equipment and technology, which are urgently needed for the country's development," Wen told the Financial Times.

Forex reserves must be spent on foreign trade and overseas investment, he said.

Good position

Massive reserves have put China in a good position to increase imports to meet domestic demand, said Yin, and this was very likely to be a major way to effectively use the money.

Imports fell for the four months ended in January, often faster than exports declined, as global trade shrank amid the economic and financial crisis. The reserves could be used to reverse that trend.