Commodity Online
BEIJING: Even when the world has been struggling to cope with the recession and its cascading effects, China has been secretly booking profits. If you have any doubt about the Communist nation’s ability to secretly convert adverse situations to its benefit, just check the data released by State Administration of Foreign Exchange (SAFE).

In a recent announcement, SAFE said China has earned $82.5 billion from nearly $2 trillion in foreign exchange reserves last year, and is now the fifth largest holder of gold.



China has been secretly buying gold for quite sometime and the country has increased its gold reserves substantially.

SAFE said the $82.5 billion return was an increase of 8 per cent on the year before. This is at a time other countires are struggling to cope with the recession.

Not only has China managed to keep its foreign exchange reserves secure and in liquid investments, but it has also made a profit, added SAFE.

SAFE also revealed that China had boosted its gold reserves by 76 per cent since 2003, making it the fifth largest holder of gold.

Beijing now has 1,054 tonnes of gold in its reserves, 454 tonnes more than it did in 2003.

SAFE said a considerable proportion of China’s earnings on its reserves was from diversified investment activities.

This is a sign that SAFE managed China’s reserves well last year when many overseas investment funds were incurring huge losses. The high returns were from diversification in multiple assets and holding various currencies.

On the whole, SAFE has been able to keep the valuation of assets under its management generally stable by making different currencies and assets complement each other.

Analysts said China’s central bank could increase its gold reserve considering the depreciation risk of some foreign currencies.

It is necessary to boost the proportion of gold holdings because China has only 2.28 per cent of the global reserves and the United States has 31 per cent.

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