According to the announcement made by the officials of the central bank of the country the foreign exchange reserves of the China increased up to $1.905 trillion at the end of September. However the foreign exchange reserves of the country were also growing throughout the previous quarters of the year and came to the point of $377 billion. But this number shows us a certain gradual decrease in the rate of accumulation that became apparent after the financial crisis affected Chinese economy.
Foreign exchange reserves were growing by $44.5 billion a month throughout first eight months of the year. But the last month showed us the growth only by $21.5 billion. And it is not still clear the reason of such rapid fall. According to the announcement of the Chinese customs the trade surplus of the country increased to $29.3 billion that is the number that wasn’t ever reached before. This happened due to the growth in both import and export areas by 21 percent.
As for the Chinese currency itself it has decreased in relation to the USD throughout the last weeks after it has increased by 20 percent.
Due to experts there are about 70 percent of China’s foreign exchange reserves in USD-denominated assets such as Treasury securities and debt issued by the other government agencies like Fannie and Freddie. Saying precisely there is $376 billion of Chinese foreign exchange reserves in US government agency debt.
According to the experts the growth of the exports can decrease sharply due to decreased demand at the European and US markets.
Furthermore China has already experienced interest rates cut over the previous two months. And now amount of money available for lending will increase due to the decreased to 16 percent reserves of the Chinese banks.
Moreover a 5% interest tax was suspended on bank deposits and certain attempts made to contribute to the exports growth. But according to economist there will be further tax falls and the government projects to contribute to the growth.
At the moment the predictions about the growth stay at the point of 9 percent that is lower than the 11.9 percent a year ago. However this is caused by the decreasing housing prices and talks about possible unemployment.