China FX Reserves Slip to $3.4003 Trillion in September

China’s foreign exchange reserves stood at $3.4003 trillion at the end of September, down $38.1 billion, or 1.11%, from the end of August, the State Administration of Foreign Exchange (SAFE) said on October 7. The agency attributed the decline to a stronger US dollar and an overall drop in global financial asset prices during the month.

According to Xinhua News, SAFE said that in September 2026, “affected by the global macroeconomic environment and major economies’ monetary policies, the US dollar index rose and global major financial asset prices fell overall,” with the combined effects of exchange-rate conversion and asset-price changes driving the monthly decline. Despite the drop, the reserve level remains near multi-year highs and comfortably above the $3.4 trillion mark it has held for several consecutive months.

Why the Reserves Fell

The decline was largely a valuation effect rather than a sign of capital outflow. When the dollar strengthens, China’s non-dollar reserve holdings—euros, yen and other currencies—are worth less when converted into dollars. At the same time, falling global bond and equity prices reduce the market value of the assets in the portfolio.

The September backdrop was notably hawkish. Wen Bin, chief economist at China Minsheng Bank, noted that the US Federal Reserve launched its first rate hike of the year in September, lifting the federal funds rate by 25 basis points to 3.75%–4.00%, with the dot plot pointing to one more increase before year-end. Oil prices topping $100, better-than-expected US PMI data and hawkish remarks from Fed officials pushed global bonds, including US Treasuries, into a selloff—lifting yields and the dollar index, jrj.com.cn reported.

The reserves figure was released alongside central bank data showing that China’s gold reserves rose for a 23rd consecutive month. Official gold holdings reached 77.47 million ounces at end-September, up 740,000 ounces from 76.73 million ounces a month earlier, according to the same jrj.com.cn report citing People’s Bank of China data. The central bank has added to its gold stock every month since November 2024.

A Deliberate Shift Toward Gold

China’s sustained gold purchases reflect a deliberate strategy of diversifying reserves toward so-called “non-credit assets.” Pang Ming, a special research fellow at the National Institution for Finance & Development, told 21st Century Business Herald that the accumulation “reflects a clear orientation toward increasing the share of non-credit assets in the reserve structure and greater emphasis on the security and long-term stability of reserve assets amid accelerating global monetary system adjustments.”

Gold’s appeal lies in its dual role as both a financial and a commodity asset, offering hedging, inflation protection and long-term store-of-value properties that sovereign currencies do not. Chinese analysts have repeatedly noted that gold still accounts for just over 9% of China’s total reserve assets—below the roughly 15% global average—leaving room for continued accumulation.

Expert Views on Stability

Economists broadly expect the reserve level to remain steady in the months ahead. Wang Qing, chief macro analyst at Orient Gold Credit Rating, said reserves above $3.4 trillion are “in a relatively ample state” under various measures, and he expects the level to stay broadly stable around $3 trillion. An appropriately ample reserve buffer, he added, supports keeping the yuan at a reasonable equilibrium level and acts as a ballast against external shocks.

Guan Tao, chief economist at Huafu Securities, attributed recent reserve movements primarily to positive valuation effects from exchange-rate conversion and asset-price changes rather than underlying capital flows.

SAFE itself struck a reassuring tone, saying China’s domestic economy is “operating generally steadily, with new momentum and improved structure,” which is conducive to keeping reserves basically stable.

What’s Next

The export outlook is a key swing factor. Wen Bin of Minsheng Bank expects exports to remain resilient, pointing to sustained high global AI capital expenditure and strong demand for chips, servers and related products. He also flagged the September consensus between China and the US on a framework to reduce reciprocal tariffs on $30 billion of goods, under which more than 90% of products would be exempted from mutually imposed tariffs and restored to most-favored-nation rates.

The bigger picture is one of resilience amid volatility. China’s reserves have stayed above $3.4 trillion for five straight months in 2026 and remain near a decade high, even as Fed tightening and a firm dollar pressure reserve valuations across emerging markets. For now, the September dip looks like a valuation-driven wobble rather than a change in China’s underlying external financial position—though the trajectory of US monetary policy and global asset prices will keep reserves in flux.