Last month China’s foreign reserves edged down by record 93.6 billion US dollars to 3.56 trillion dollars as a result of China’s government measures to strengthen the national currency.
In August, the yuan fell sharply against the US dollar. Following the financial markets slump, the People’s Bank of China devalued the national currency by 3.5%. This happened because of the yuan’s floating peg to the US dollar. It is an incredible drop for the past two decades.
Fund outflows from China were triggered by the repayments of foreign debts, which amounted to 700 billion US dollars this year. In 2016, the Chinese companies will have to pay 900 billion dollars.
For the last 35 years, China’s foreign reserves have been growing sustainably. In the beginning of 1980s, they equaled 3 billion US dollars and in 2014, China’s foreign reserves reached the historical peak of 4 trillion dollars.
