Oct. 12 (Bloomberg) -- China's foreign-exchange reserves, the world's biggest, rose to a record $1.43 trillion at the end of September, adding pressure for faster yuan gains to prevent the economy from overheating.

Currency holdings expanded 45.1 percent from a year earlier, the People's Bank of China said today on its Web site. The assets grew $101 billion from the end of June, after a $130.6 billion increase in the second quarter.

A swelling trade surplus, investment from overseas and inflows of money from investors betting the yuan will continue to strengthen have pushed reserves higher. The cash threatens to fuel asset bubbles and inflation at an almost 11-year high.

``A gradually appreciating currency gives investors a one- way bet and encourages more money inflows,'' said Eric Fishwick, deputy chief economist at CLSA Asia-Pacific Markets in Singapore. More uncertainty is needed to ``make the yuan trade risky,'' Fishwick said.

China's trade surplus surged 69 percent in the first nine months from a year earlier to $185.65 billion, topping the $177.5 billion record for all of 2006. The nation's rising interest rates encourage investors to speculate on the yuan.

A 10 percent gain in the currency versus the dollar since a fixed exchange rate ended in July 2005 hasn't appeased some U.S. and European lawmakers and officials. A stronger yuan would make exports more expensive and help China boost domestic consumption by cutting the cost of imports.

Faster Yuan Gains

U.S. Treasury Undersecretary David McCormick said last month that the yuan needs to rise faster to ``better balance'' the Chinese economy, which depends on investment for growth. China widened the currency's trading band in May to allow moves of as much as 0.5 percent against the dollar each day, from the previous limit of 0.3 percent.

The People's Bank of China last month raised interest rates for the fifth time since March after inflation accelerated in August to 6.5 percent. The central bank has also ordered lenders to set aside bigger reserves on seven occasions since January and sold bills to soak up cash.

To ease the build-up of money, China has loosened restrictions on capital outflows. In August, the government announced a pilot program allowing some individuals to buy Hong Kong stocks.

It has also set up an investment arm to manage some of the reserves. China Investment Corp., a $200 billion fund, bought a stake in Blackstone Group LP, the New York-based private equity firm, in May.

The Chinese company ``will grow into one of the world's largest investment vehicles over time,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong.

China's economy, the world's fourth largest, expanded 11.9 percent in the second quarter from a year earlier, the fastest pace in more than 12 years.

To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net

Last Updated: October 12, 2007 06:45 EDT