Eye-watering would be an apt description. Last month, China’s foreign exchange reserves jumped US$5.82 billion to more than $3.1 trillion despite escalating trade tensions.
On Tuesday, the People’s Bank of China, the country’s de facto central bank, released data which showed an unexpected rise from June’s figure of $1.51 billion.
“Foreign exchange reserves rose $5.8 billion, or 0.19% from a month earlier, to $3.1179 trillion at the end of July, the central bank said,” Xinhua, the country’s official news agency, reported.
“China’s gold reserves remained unchanged at 59.24 million ounces, with a value of $72.324 billion, down from about $74.07 billion at the end of June,” it added.
The numbers came out amid fresh concerns of capital outflows with the yuan tumbling to its lowest level in more than a year.
China’s currency has dropped 6.3% since June 14 due to the trade fallout between Washington and Beijing. In July, the yuan weakened for a fourth straight month, the longest streak since early 2015.
Last week, President Donald Trump’s chief economic advisor, Larry Kudlow, told the media that continued pressure on the currency was a sign that “money” was “leaving China,” as the trade conflict intensifies.
“Some of the fall is money leaving China,” the director of the White House’s National Economic Council said in an interview with Bloomberg TV. “If money leaves China, and the currency could be a leading indicator, they’re going to be in a heap of trouble.”
ING Group tended to take a more measured view. The Dutch multinational banking and financial services group pointed out that the “recent depreciation of the yuan” had failed to spark “massive capital outflows.”
“Going forward, we expect reserves to remain relatively stable as the central bank steps in and the government expand FDI [foreign direct investment] inflows,” ING economists said.
“If the yuan depreciation speeds up again, like earlier this month, then the PBOC is likely to reintroduce the “counter-cyclical factor” to cap the yuan depreciation level [to] discourage massive capital outflows,” they added.
Of course, if a new wave of tit-for-tariffs is rolled out, it might be a different story.
It is mind boggling number! Has any one seen spending few billions in aid to poor countries?
Nah! It is nothing. US debt including unfunded liabilities is over U$70 trillion now, oribabky kciser to U#80 trillion!
China usually applies technology advances to peaceful applications.
Let us not waste time on US advances (very few now) and usually on military applications.
In a trade war with USA it is beneficial for Chinese Yuan to depreciate against USD
Perry
Aids to poor nations have led to failure 100% of the times for two simple.reasons: First, the aid money never reached the poor countries’ people at large but only the elites. Second, with such aids, the rich donor will certainly influence the poor nation’s leaders, making them puppets for political purposes but not for benefits of those poor people.
China’s help comes in the form of projects and trades, which provides an economic life on their own right and the successes can also be measured. Of course, China can always choose the more.friendly nations to help, but the help can reach the people at large.