China announces growth in foreign reserves

China’s foreign reserves have risen to $2.13 trillion (€1.51 trillion) after growth picked up in June despite a slump in trade, data showed today.

The reserves, already the world’s largest, expanded by 17.8% or $186bn (€132bn) dollars over the first half of the year, the central bank said.

It said the increase in June alone was $42bn (€30bn) – nearly equal to growth for the full final quarter of last year.

China’s reserves have ballooned as the central bank buys up dollars generated by its huge trade surplus and influx of investment. The latest upturn despite a trade slump suggests the difference was being made up by an increase in foreign investment flowing into China.

China’s reserves are more than double those of Japan, which has $988bn (€703bn).

Chinese leaders have expressed concern about the stability of the US dollar and the value of Beijing’s vast holdings of American government debt.

China is Washington’s biggest foreign creditor and is believed to keep almost half of its reserves in US Treasurys and notes issued by government-affiliated agencies.

Despite such concern, the US government says Beijing is continuing to buy substantial amounts of Treasurys.