When President Hu Jintao joins his opposite numbers from the Group of Eight club of rich countries next week at their summit meeting in the medieval Italian city of L'Aquila, he will be keen to push Beijing's proposals for a new international reserve currency.
Mr Hu's eagerness is understandable. After years of running massive trade surpluses and intervening heavily in the foreign-exchange market to prevent the yuan appreciating against the US dollar, China is now sitting on a vast pile of foreign-currency assets.
At the end of March, Beijing's official foreign-exchange reserves were worth US$1.954 trillion. But even that huge amount is only a part of the story. Add in funds managed by the country's sovereign wealth fund and state banks and, according to research by Brad Setser at the Council on Foreign Relations, a US think tank, Beijing's total foreign-currency assets come to about US$2.3 trillion (see the first chart below).
Most of those assets are in dollars. If China's foreign reserves break down in line with global reserve holdings (see the second chart), then about two-thirds of its holdings are in dollars, or about US$1.5 trillion.
With the US Federal Reserve printing money and the government in Washington running ever larger deficits in an attempt to keep its crisis-struck economy afloat, Chinese officials are naturally worried about the dollar's merits as a store of value.
'We have lent a huge amount of money to the United States. Of course, we are concerned about the safety of our assets,' Premier Wen Jiabao admitted in March.
Beijing would dearly like to diversify its reserves away from dollars to lessen the risk of valuation losses should the US currency fall. But any attempt to shift its stock of assets into other currencies, or even any move to stop accumulating dollar debt, would risk triggering exactly the dollar collapse that officials fear. China is caught in a dollar trap.