China clung to US dollars in 2015 as its stock market crashed and capital flowed out, SAFE figures show

Despite the financial carnage, the US dollar accounted for 58 per cent of China’s forex reserves throughout the year, agency says in its annual report

Risk prevention the top priority in management of forex reserves in 2020, it says

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US dollars accounted for 58 per cent of China’s foreign exchange reserves at the end of 2015. Photo: Reuters

Published: 12:59pm, 2 Aug 2020Updated: 10:37pm, 2 Aug 2020

Despite the stock market rout and capital exodus of 2015, China’s holdings of US dollars as a proportion of its foreign exchange remained rock solid throughout the year, figures from an official report show.

The State Administration of Foreign Exchange (SAFE) said in its 2019 annual report published on Friday that US dollars accounted for 58 per cent of its total reserves at the end of 2015, unchanged from the end of 2014.

It did not give equivalent figures for any of the years since 2015 or a detailed breakdown of the country’s US$3.1 trillion stockpile of foreign currencies.

The SAFE traditionally kept the currency structure of China’s foreign reserves a secret, until July last year when it said in its annual report for 2018 that US dollar assets accounted for 58 per cent of the total at the end of 2014, down from 79 per cent at the end of 1995.

Before those figures were released, most analysts thought the dollar accounted for at least two thirds of China’s reserves, suggesting Beijing had been quite aggressive in diversifying its holdings. US dollar reserves ballooned from US$73.6 billion at the end of 1995 to an all-time high of US$3.99 trillion at the end of June 2014.

The lack of movement in reserve percentage terms from 2014 to 2015 may reflect Beijing’s changing attitude towards the US dollar at the time. The 2015 stock market crash sparked severe financial turbulence and resulted in the authorities cutting the value of the yuan by 2 per cent against the dollar – bringing to an end a decade of appreciation for the currency.