BEIJING: Experts said on Monday that China’s foreign exchange reserves are expected to experience a moderate rise this year. This positive outlook is attributed to the improvement in export growth and the recovery of capital inflows, following a two-year high reached in December, China Daily said.
The country’s official reserves in gold surged by the largest amount in eight years in 2023, a trend experts said is likely to continue as the country further diversifies its reserves away from dollar-denominated assets and capitalises on rising gold prices.
Their comments came after the State Administration of Foreign Exchange said on Sunday that China’s foreign exchange reserves reached $3.238 trillion as of the end of last year, the highest since December 2021, while gold reserves rose for the 14th consecutive month.
The administration said the country’s foreign exchange reserves were up $66.2 billion, or 2.1 percent, compared with the end of November.
For the full year of 2023, China’s foreign exchange reser
ves rose by $110.29 billion, the biggest increase in six years, compared with a $122.5 billion drop in 2022.
Guan Tao, global chief economist at BOC International, said the country’s foreign exchange reserves climbed last year as the US Federal Reserve slowed monetary tightening and made the US dollar weaker amid fluctuations.
Liu Chunsheng, an associate professor at the Central University of Finance and Economics, said the increase also reflects the resilience of the Chinese economy, with the country’s exports having resumed positive growth in November despite lukewarm global demand.
The nation saw the resumption of net foreign capital inflow into securities in November when foreign investors purchased a net $33 billion in onshore bonds, the second-highest on record, data from the administration showed.
Meanwhile, China’s official gold reserves reached 71.87 million ounces at the end of December, up from 71.58 million ounces a month earlier. In 2023, the country’s gold reserves were up by 7.23 million ou
nces, the biggest increase since 2015, according to the administration.
The official gold reserves may further increase as the country diversifies reserve assets, said Wang Youxin, a senior researcher at the Bank of China.
At its annual work meeting last week, the administration emphasised that it will improve the management of foreign exchange reserves to ensure the security and liquidity of reserve assets and preserve and increase the value of these assets.
Source: Emirates News Agency
