China’s foreign reserves hold steady as external earnings stay in private hands
China’s foreign exchange reserves barely budged last year despite a record US$1.18 trillion trade surplus, as the country’s massive external earnings increasingly wound up on the balance sheets of domestic households, commercial banks and corporations rather than in Beijing’s central coffers, a new report from the Institute of International Finance (IIF) shows. China has long been a major net…
China's foreign exchange reserves remained relatively stable in 2025, despite a record US$1.18 trillion trade surplus, as the country's external earnings increasingly ended up in the hands of domestic entities rather than the central government's reserves, according to a report by the Institute of International Finance (IIF). The report indicates that China's non-reserve sector, comprising banks, companies, and investors, became a net creditor for the first time in 2025.
This shift in the institutional center of surplus recycling reflects a broader change in how China utilizes its savings abroad, with private market participants gaining greater control over currency conversion and asset allocation. The surge in non-reserve external assets to over US$8 trillion underscores the growing influence of domestic players in managing China's foreign reserves.
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