Gold and foreign exchange reserves of China

Main article: Economy of China

2024

China is the world's largest holder of foreign exchange reserves: $3.2 trillion. About 60% in dollars

China is the world's largest holder of foreign exchange reserves, with $3.2 trillion at the last count made in April 2024. The currency breakdown was not disclosed, but experts believe that no more than 60% of them are in dollars.

People's Bank of China gold reserves rise to 5.1% in reserves

Since 2015, China has increased gold reserves in tons by almost 2 times and in mid-2024 gold accounts for 5.1% of China's reserves.

As China sells dollar assets, the country's official reserves have a growing share of gold. According to the central bank, in 2015 the share of gold in reserves was less than 2%.

In April, the Central Bank of China increased its gold reserves for the 18th month in a row.

Gold reserves at the People's Bank of China rose 60,000 troy ounces in April. This is equivalent to approximately 1.87 tons, and the total reserves reached 2264.3 tons.

Reducing the volume of US Treasury bonds to $797.7 billion or 30% of reserves and refusing new investments in them. Purchase of metals

Since 2013, the volume of US Treasury bonds on China's balance sheet has decreased by more than 40% and in April 2024 amounted to $797.7 billion. Now the trend towards getting rid of the "Treaseris" in China is intensifying.

The value-adjusted share of US Treasury and agency bonds in China's total foreign exchange reserves decreased to 30% from 44% in 2015.

In the first quarter of 2024, Chinese banks got rid of treasury and agency bonds totaling $53.3 billion, according to calculations based on the latest data from the US Treasury Department. Belgium, which is often seen as the custodian of Chinese assets, got rid of $22 billion in Treasuries over the specified period.

By the beginning of April 2024, China exports more to the world than ever, but it does not want to invest earned dollars in US Treasuries, since this will only exacerbate its dependence on this aggressive country.

Therefore, China creates stocks of goods denominated in dollars. Imports of basic metals rose 60% compared to the period before. Covid-19

Flow data shows Japan that in the first quarter, U.S. Treasury bonds in grew by $51.4 billion.

The comparison between Japan and China is instructive, since they occupy their place in the global geopolitical spectrum.

2023

Gold reserves - 2,165 tons

China has been restocking its gold reserves for the tenth month in a row, continuing to grow its huge reserves as it tries to diversify them away from the US dollar. Asia's largest economy has recently been one of the most active buyers of gold.

In August 2023, gold reserves at the People's Bank of China increased by 930 thousand troy ounces, the Central Bank said. This is equivalent to about 29 tons. The total amount of reserves at this time is 2,165 tons, with about 217 tons added as a result of a series of purchases that began in November.

Direct Chinese investments in US public debt fell to a minimum since 2009 - $822 billion

In July 2023, China reduced its holdings of US Treasuries to $822 billion, the lowest since 2009. Beijing has sold $300 billion in Treasuries since 2021, with sales accelerating in recent months.

Part of the decline in the share of Treasury bonds is explained simply by their assessment. Bonds fell in price in 2022 and will fall again in 2023 thanks to rising interest rates.

And while China's direct reserves have shrunk, it has likely diverted some of its reserves elsewhere, experts say. Belgium In, known as the securities storage center, there is an increase in their volume.

In addition, Chinese buyers have recently purchased not Treasury bonds, but other types of American bonds, for example, bonds sold by Fannie Mae and Freddie Mac.

Bottom line: China's central bank likely "did not give up the dollar in large part despite a sharp decline in U.S. Treasury holdings," economists at JPMorgan Chase, led by Haibing Zhu, write in a note dated Oct. 31, 2023.

Earlier in May 2023, China reduced investments in the US public debt to $846.7 billion. This is $22.2 billion less than in April 2023, when the volume of Chinese investments in American debt securities was $868.9 billion. The recorded figure was the lowest since May 2010: then investments were estimated at $843.7 billion. If we compare with May 2022, the fall in investments amounted to $105.1 billion.

It is noted that China's investments in US government bonds peaked in November 2013 - 1.32 trillion. Since then, investment as a whole has been on a downward trajectory (with a number of exceptions). This is explained by several reasons. One of them is the deteriorated relations between Beijing and Washington: US sanctions seriously impede the production of microchips in the PRC and prevent Chinese enterprises from purchasing lithographic equipment.

In addition, the US Federal Reserve conducted an aggressive series of key rate hikes to curb record inflation. However, such a policy leads to an increase in the cost of borrowed funds for business and the population. Against this background, enterprises and citizens begin to refuse credit money, which leads to a weakening of economic activity. To reduce the resulting losses, China has reduced its assets.

In conditions when a further drop in the value of US government bonds is expected, China decided to get rid of some of the retained positions. The PRC adheres to a balanced strategy of diversifying its reserves. There is also a political factor: Beijing does not exclude the likelihood of freezing its investments by the American authorities, - said Freedom Finance Global analyst Roman Lukyanchikov.[1]

Gold reserves rise to 2,330 tonnes

China has been replenishing its gold reserves for the eighth consecutive month, with purchases made due to economic and geopolitical risks, as well as a desire to move away from the US dollar. In June 2023, PBOC's gold reserves increased by 23 tonnes, reaching 2,330 tonnes.

More than $6 trillion in reserves, of which half is hidden

China has reserves of $6 trillion, half of which are "hidden." While China's official reserves have remained on par in recent years, "hidden" ones were likely rising along with a surplus in Chinese exports, said Brad Setser, a former U.S. trade and Treasury official.

China's official reserves

China increases reserves in gold and reduces investments in US public debt

Main article: Investment in gold

China is increasing reserves in gold. Data as of March 31, 2023

According to the US Treasury, in February 2023, the Chinese portfolio of investments in American public debt decreased by another $10.6 billion - to $848.8 billion.

Beijing's investments in the American public debt have decreased to a minimum over the past 12.5 years. China has been cutting investment for the seventh month in a row.

2022: World's largest reserves - $3.31 trillion

At the end of 2022, China's reserves amounted to $3.31 trillion, Japan took second place with accumulations of $1.27 trillion, Switzerland - third with assets of $924 billion. Russia finished the year in fourth place with $582 billion. India is fifth, its reserves reach $563 billion.

The foreign exchange reserves of the PRC, the largest in the world, in April 2022 decreased by $68 billion and amounted to $3.120 trillion, according to data from the People's Bank of China.

Reserves decreased for the fourth month in a row after December 2021 reached a record level over the past six years of $3.25 trillion. In addition, their fall in April was a record since November 2016. Now the volume of reserves is the minimum since June 2020.

China in May 2022 reduced investments in the US national debt by $23 billion. China's investment in US public debt fell below $1 trillion for the first time since 2010.

China is the second largest foreign holder of US public debt after Japan.

2021: Cut from $3.2 trillion to $3.17 trillion

At the beginning of 2021, China's foreign exchange reserves fell for the third month in a row as a result of a combination of a number of factors, including the strengthening of the dollar.

Reserves fell to 3.17 trillion from dollars $3.205 trillion in February, the People's Bank of China said in a statement.

Since late January, the yuan has weakened 1.8% against the dollar, after skyrocketing against dollar for much of last year.

2020: $3.17 trillion

China's foreign exchange reserves in November 2020 rose to their highest level since August 2016, by more than $50 billion.

Reserves increased for the first time in three months, reaching $3.1785 trillion. The value of gold assets fell to $110.4 billion.

2018: $3.16 trillion

Compared to other countries

See also

• International (gold and foreign exchange) reserves of Russia