China forex reserves top $3.8 trillion in 2013

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Beijing - China's foreign exchange reserves, already the world's largest, reached $3.82 trillion yuan at the end of 2013, the central bank said Wednesday, a new record.

The end-of-year figure was up from the $3.66 trillion as of the end of September, according to data published by the People's Bank of China (PBoC).

It came after the country's trade surplus reached $259.75 billion last year, up 12.8 percent on 2012 and its highest since the global financial crisis.

Growth in China's vast reserves has been fuelled by years of huge trade surpluses as the country has grown to become the world's second-largest economy.

The surpluses have caused friction with China's rivals in the West, headed by Washington, which says Beijing keeps its yuan currency artificially low in order to make its goods cheaper overseas and give exporters an unfair advantage.

But the rate of growth of China's reserves has slowed in recent years as the once-booming economy is hit by troubles in the key export markets of Europe and the United States, while the yuan has been steadily strengthening against the dollar.

Analysts attributed some of the 2013 surge to speculative capital inflows, sometimes disguised as exports or foreign direct investment.

“We reckon hot money inflow pressures could be still strong at the moment,” Bank of America Merrill Lynch economists said in a research note, citing China's rising interest rates, the rise of the yuan and confidence in the currency's strength despite the tapering of the US stimulus.

A government report last month cited in state media suggested China's gross domestic product (GDP) grew 7.6 percent in 2013, down from 7.7 percent in 2012, which was the worst performance in 13 years.

The government is due to issue 2013 GDP growth figures on Monday.

Chinese leaders have repeatedly said they want to transform the economy to one in which domestic demand is the key growth driver, rather than public investment and exports.

But the daunting task looks set to be a long and arduous process.

The central bank said Wednesday Chinese lenders extended a total of 8.89 trillion yuan ($1.47 trillion) in new loans last year, 687.9 billion yuan more than in 2012 and surpassing the reported official target of 8.5 trillion yuan set at the start of 2013.

In December alone, banks granted 482.5 billion yuan in new loans, down from 624.6 billion yuan a month ago, according to a PBoC statement. - Sapa-AFP



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