China’s banks stockpiled over $1 trillion of foreign currency deposits for the first time ever, allowing capital to flow out of the country more freely, reported Bloomberg.
With the growth of demand for Chinese goods during the pandemic and more foreign investors purchasing Chinese stocks and bonds, the foreign earnings of exporters increased, and foreign currency deposits grew steadily. Through May, deposits surged over $260 billion.
According to the People’s Bank of China (PBOC), commercial lenders had a record of $1.38 trillion of foreign exchange last month during which the foreign reserves of the PBOC rose to the highest it’s been in five years. The rapid accumulation was due to surges in overseas investors, high demand for Chinese products, and a surplus in trade.