- China’s central bank added 29 tonnes of gold to its reserves in August, its 10th consecutive increase.
- The country’s reserve of safe-haven assets has matched efforts to move away from reliance on the dollar.
- China recently brought its share of the US treasury to its lowest level since 2009.
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China’s central bank has increased gold purchases for a 10th consecutive month as the world’s second-largest economy seeks to move away from its reliance on dollar reserves.
The People’s Bank of China’s precious metal stockpiles rose by 29 tonnes in August to 2,165 tonnes, according to Bloomberg. The outlet said that total was added in the past 10 months to about 217 tonnes.
The hoarding of gold in China has come to the fore amid the dollar’s dominance in global trade and investment flows, as well as the country’s effort to reduce its status as the world’s reserve currency. The Asian country reduced its treasury holdings to a 14-year low in June.
Of course, China is not the only country that is increasing its gold holdings. According to a May report by the World Gold Council, 62% of central banks forecast that the yellow metal will make up a major portion of reserves over the next five years.
China and many other countries have stepped up efforts in recent years to reduce their reliance on the greenback in international trade and investment – particularly as the US imposes economic and financial sanctions on countries including Russia and Iran. With the advantage of supremacy.
“The dollar’s reserve status is a privilege that gives the US significant political, economic and market influence,” GlobalData’s TS Lombard’s Skylar Montgomery wrote in a note last month.
“The weaponization of the dollar is part of the reason why Russia, China and other BRICS countries have competed for alternatives to the dollar,” he said.
The success of the so-called de-dollarization movement is so far unproven – the greenback’s share in payments around the world has reached a record high. According to Bloomberg, SWIFT payments pegged to the US dollar surged an unprecedented 46% in July.
Meanwhile, BRICS countries are also exploring the option of creating a common currency to challenge the dollar.
However, some market experts have scoffed at the de-dollarization efforts – the economist who first gave the BRICS bloc its name described the plan as “shameful”.