BEIJING - China’s foreign exchange reserves rose to their highest in more than a year in December, blowing past economists’ estimates, as tight regulations and a strong yuan continued to discourage capital outflows, central bank data showed on Sunday.
Notching up their 11th straight month of gains, reserves rose $20.2 billion in December to $3.14 trillion, the highest since September 2016 and the biggest monthly increase since July. That compares with an increase of $10 billion in November. Economists polled by Reuters had expected reserves to rise by $6 billion to $3.125 trillion.
Capital flight had been seen as a major risk for China at the start of 2017, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the economy. The yuan rose around 6.8 percent against the greenback in 2017, recovering from a 6.5 percent loss in 2016 and reversing three straight years of depreciation.
For the full year, China’s FX reserves rose $129.5 billion from $3.011 trillion at the end of 2016. That’s the first annual rise since 2014.
China’s foreign exchange regulator said in a statement on its website that it would keep the nation’s forex reserves and international balance of payments “balanced and stable” in 2018.
The country’s reserves dropped by nearly $1 trillion from a peak of $3.99 trillion in June 2014 to $2.998 trillion in January 2017 as it sought to shore up the yuan and reduce potentially destabilizing capital outflows. But reserves have since climbed by $142 billion.
Despite the improved capital flow picture, China’s State Administration of Foreign Exchange has continued a clampdown on the movements of funds abroad. The regulator announced last month it would cap overseas withdrawals by people using domestic Chinese bank cards starting this year.
Some major global acquisitions by Chinese firms have also been put on ice by regulators, who fear they are really intended to disguise movements of capital offshore, though Beijing has maintained genuine investments will still be approved.
China’s central bank reported net foreign exchange buying for the third consecutive month in November, marking a policy victory for the authorities after a long battle to stabilize the yuan, although analysts say capital flows are likely to remain volatile as the economy slows.
Economists polled by Reuters expect the yuan to depreciate slightly this year if the dollar firms.
The value of gold reserves rose to $76.47 billion at the end of December, from $75.833 billion at the end of November, data on the People’s Bank of China’s website showed.
China fruit, vegetable
prices surge
Fruit and vegetable prices in major cities in central and northern China have surged after severe winter weather cut off highways and damaged crops, the government said late on Saturday.
Parts of highways connecting Henan, Shanxi, Shandong, Anhui and Jiangsu provinces were blocked. In northern Shanxi province, greenhouses for vegetables collapsed under the weight of snow, footage on state television showed on Sunday.
“More than 45,000 acres of fruit trees, tea farms as well as greenhouses for vegetable have been damaged by freezing rains and snow,” the Ministry of Agriculture said, adding that wheat planting could be delayed due to the cold weather.
The city of Hefei, the capital of Anhui province, will give residents discounts on vegetables for seven days after prices increased, state radio said on Sunday, citing the city’s pricing regulator.
State radio said prices of vegetables like cabbages and lettuce more than doubled in the past week in eastern Anhui province due to transport curbs and damage to crops.
China warned of a second wave of snow and sleet hitting northern, central and eastern parts on Friday after record snowfall paralyzed parts of the country in the most severe weather this winter.