China has adopted a steady and moderate policy in operating its foreign exchange reserves, and the country will continue to do so, Yi Gang, vice governor of People's Bank of China, told Xinhua Tuesday.

China's management of its foreign exchange reserves are guided by the principle of maintaining safety, liquidity and profitability, he said.

"It is a comparatively conservative policy," Yi said, "however, it has successfully maintained the safety of our foreign exchange reserves and secured normal profits against the global financial crisis."

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

The vice governor said part of the country's foreign exchange reserves are held in U.S. government bonds, and China would seek to protect its own interest when deciding whether to buy more in the future.

According to the U.S. Treasury, China held 681.9 billion U.S. dollars worth of U.S. government bonds as of last November.