Funny you should mention that while this thread is running on FR: Report: China's Foreign Reserves Fall (China switching dollars for Euros)
Yes, they are diversifying into Euros. That is just good business pratice. A long way from dumping the dollar for the Euro. That would not be good pratice. They will hold and invest a mix of both currencies. In the long run, they will tend to hold those currencies and investments that benefit them the most. I think that will be capitalist dollars and not socialist Euros. Time will tell.