China on Sunday said its foreign reserves, the world’s largest, declined by about half a trillion dollars last year which largely went to its citizens and companies.
“China’s foreign reserves declined by about half a trillion US dollars in 2015,” central bank deputy governor Yi Gang said.
“Mainly, the reserves went to Chinese citizens and companies,” he told the media replying to the public concerns over the dip in the reserves.
Banks increased their stack of greenbacks by around $100 billion and corporate debts denominated in US dollar dropped by around 100 billion, Yi said.
Corporate and individual outbound payments in foreign currencies surpassed inbound payments by $240 billion last year, Yi said.
Major outbound payments include tourism, education and consumption expenditures.
Plus, the US dollar appreciated against other currencies last year, Yi was quoted as saying by state-run Xinhua news agency.
“By and large, the majority of foreign reserve losses can be explained by the gains made by citizens and companies,” Yi said.
China has the world’s largest foreign exchanges amounting to about $3.23 trillion over half of which were invested in US bonds.
Yi was replying to a question about China’s foreign reserves twice at a press conference on the sidelines of the fourth session of the 12th Chinese People’s Political Consultative Conference (CPPCC) National Committee, of which he is a member.
China’s foreign reserves are diversified, he said, reflecting China’s trade, investment and payment structures.
Moreover, China follows the standards set by the International Monetary Fund when calculating foreign reserves, Yi said, stressing that assets that lack in liquidity were not included.