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People’s Daily Online: China Should Increase Its Gold Reserves

On September 6, 2011, People’s Daily Online published an article suggesting that China should increase its gold reserves when the time is right.

“The strategic significance of increasing gold reserves is to relieve the risk to our foreign exchange reserves. China’s foreign exchange reserves exceed US$3 trillion, of which 70% is in U.S. dollar denominated assets. Due to the current structure of our foreign exchange reserves, the security of our national wealth is highly dependent on the United States. If the U.S. dollar continues to depreciate, our foreign exchange reserves will shrink dramatically. At an appropriate time, (we should) convert part of our foreign exchange reserves into gold reserves. When the U.S. dollar depreciates, the price of gold will rise, which will make up for our loss due to the depreciation of U.S. dollar assets, ease the risk to our foreign exchange reserves, and safeguard our national wealth.”

"According to World Gold Council (WGC) data on every country’s gold reserves, in August, the United States’ gold reserves were 8,133.5 tons, which amounts to 74 percent of all of its foreign currency reserves; China’s gold reserves were a little more than 1,000 tons, which amounts to only 1.6 percent of China’s total foreign reserves, ranking it sixth in the world."

Source: People’s Daily Online, September 6, 2011