BEIJING: China’s foreign exchange reserves surged to a record $2.399 trillion at the end of December, the central bank said on Friday.
The reserves, already the world’s largest, grew 23.3 percent from a year ago, the People’s Bank of China said in a statement on its website.
The central bank had said previously its reserves were at $2.27 trillion as of the end of September.
China’s forex reserves have ballooned in recent years, fueled by strong foreign investment, large trade surpluses and inflows of “hot money” — short-term speculative funds in search of quick profits.
The data marked an increase in forex reserves of $453.1 billion from a year earlier, the bank said.
China’s exports, a key driver of its forex reserve hoard, softened in 2009 but have since rebounded, according to government data released on Sunday.
China’s customs bureau said the nation’s exports surged 17.7 percent in December to snap a 13-month falling streak. Data out of Germany earlier in the month showed China overtook Europe’s biggest economy in November to become the world’s top exporting nation. Foreign direct investment in China doubled year-on-year last month to $12.1 billion, officials said Friday.
China has invested a large portion of its vast reserves in US dollar assets, such as safe low-yielding US Treasury bonds, but amid the financial crisis Beijing has tried to diversify its investments to improve returns.
One way Beijing has been doing this is through its $200-billion sovereign wealth fund, China Investment Corp., which has been investing heavily in resources companies.
Trade-related data such as forex reserves have long been a source of friction with trading partners such as the United States.
Experts have said a resurgence in Chinese trade will likely bring renewed pressure on Beijing to let its currency appreciate.
China’s Western trading partners say Beijing keeps the yuan’s value low to boost its exports. China has recently said it will not bow to foreign pressure to adjust its currency policy. China’s overseas investment in non-financial sectors rose 6.5 percent last year from 2008 despite the economic downturn, the government said Friday, as the nation kept up its global hunt for resources. Overseas investment in mining, manufacturing and other non-financial sectors reached $43.3 billion last year, Commerce Ministry spokesman Yao Jian said at a news conference.
The growth, however, was far more modest than a 63.6-percent annual jump in 2008, when investment hit $40.65 billion. “Acquiring foreign advanced technologies, distribution networks and energy and resources became the new focus of acquisition investment,” the ministry said in a statement after the briefing.
The pace of buying picked up sharply in the second half of 2009 as the worst of the crisis seemed to be over, after diving by 51.7 percent year-on-year in the first half, previous official data showed.
China has been keen to buy resources around the world as it seeks to take advantage of falling prices in the global downturn and to secure energy supplies for its economic expansion.
China’s trade surplus, a key source of friction between China and its major trade partners including the United States and Europe, stood at $196.1 billion in 2009, down 34.2 percent from 2008.
“I think the trade balance will improve further (this year),” Yao said, meaning he expected the Chinese surplus to decline.
Data out of Germany this month showed China overtook Europe’s biggest economy in November to become the world’s top exporting nation, as other countries suffered even more from the financial crisis.
