China increases its gold reserves amid trade war with the US.
China resumed buying gold last year when Russia became one of the five countries with the largest gold reserves. The Bank of China added 20 tons of gold to its reserves between December and January, according to a bank publication; this brought China's total reserves to around 1.864 tons, increasing its reserves for the first time since October 2016.
247, with Sputnik - China resumed buying gold last year when Russia became one of the five countries with the largest gold reserves. The Bank of China added 20 tons of gold to its reserves between December and January, according to a publication by the bank.
With this, China now possesses around 1.864 tons, increasing its reserves for the first time since October 2016.
The Chinese action, in addition to occurring during a period of slowing global economic growth, follows a pattern seen in other countries, such as Russia and Japan, of reducing their holdings of US dollars and US Treasury bonds, which are viewed in those countries as a risky investment.
Furthermore, there is currently uncertainty surrounding the trade war with the US, according to stock market analysts.
China's action is not a surprise, says senior commodities analyst Carsten Fritsch of the German financial and banking services company Commerzbank AG to Bloomberg; however, the surprise was that it wasn't resumed sooner.
China possesses a relatively small percentage of gold in its international reserves; consequently, the country still needs to acquire a larger quantity of this metal.
Currently, China possesses the sixth-largest gold reserves in the world, representing only a fraction of its total reserves. Gold accounts for just 2,4% of the total US$3 trillion (R$11 trillion), most of which is held in US dollars, US Treasury bonds, and other obligations.
With the acquisition of gold, China intends to secure a "safe haven" amidst geopolitical risks, senior analyst Jeffrey Halley told the South China Morning Post, emphasizing that "China has long been trying to diversify its reserves beyond the US dollar."
The Chinese Central Bank is rushing to acquire gold, just as Russia has done, increasing its precious metal reserves from 275 tons to a total of 2.112 tons, placing Russia among the five countries with the largest gold reserves.
The list has the USA in first place with 8.130 tons, Germany in second place with 3.370 tons, Italy in third place with 2,450 tons and France in fourth place with 2.440 tons.