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China Banks Stockpile Record $1 Trillion of Foreign Exchange

  • Capital inflows open up liberalization window: Deutsche Bank
  • Inflows have risen as exports grow, overseas funds buy bonds
Hong Kong Dollar, Chinese Yuan and US Dollar Banknotes As Currency Peg Intervention From HKMA Continues Into Third Day
Photographer: Paul Yeung/Bloomberg
Updated on

Chinese banks’ stockpile of foreign-currency deposits has surpassed $1 trillion for the first time, creating an opportunity for Beijing to allow greater freedom for capital to flow out of the country.

The pool has been growing as surging demand for Chinese goods during the pandemic has beefed up foreign earnings of exporters, while the resilient economy and strengthening currency have lured overseas investors to sell dollars for yuan to buy Chinese stocks and bonds. Bank deposits in foreign currencies jumped more than $260 billion in the year through May, the most in data starting in 2002.