China’s FX Reserves Slip to $3.4003 Trillion in September
China’s foreign exchange reserves stood at US$3.4003 trillion at the end of September, down US$38.1 billion — or 1.11% — from the end of August, according to official data released on October 7 by the State Administration of Foreign Exchange (SAFE). The decline was driven principally by valuation effects rather than capital flows, as a stronger US dollar and broadly lower global asset prices reduced the dollar-denominated value of the reserves.
The figure keeps China’s reserves above the US$3.4 trillion mark for a sixth consecutive month, underscoring the continued scale of the country’s external financial buffers.
Official Explanation: Valuation, Not Flows
In its official release, SAFE attributed the monthly drop to the global macroeconomic environment and the monetary policies of major economies. It noted that the US dollar index rose in September while the prices of major global financial assets fell broadly, and that “the combined effect of exchange-rate conversion and asset-price changes” reduced the reserve scale during the month.
This framing is significant. China’s reserve changes are largely shaped by two technical factors rather than active buying or selling by authorities: the exchange-rate conversion effect, since most reserves are held in non-dollar assets that are worth less in dollar terms when the greenback strengthens; and the asset-price effect, as falling prices of assets such as US Treasuries lower the valuation of reserve holdings.
SAFE added that China’s economy is “operating generally smoothly, with new momentum and an improving structure,” conditions it said are “conducive to keeping the scale of foreign exchange reserves basically stable.”
Data Confirmed Across State Media
The official data, carried by Xinhua News Agency, confirmed the reserve total of US$3.4003 trillion and the US$38.1 billion month-on-month decline. CCTV and the Economic Observer carried the same figures, as did People’s Daily, which described the reserves as an important buffer for the economy.
China News Service added analyst commentary drawn from data covering the same September period. Pang Ming, a member of the China Chief Economist Forum, argued that the September decline “more reflects valuation adjustments caused by volatility in international financial markets, rather than any marked change in foreign exchange supply and demand.” He noted that the reserve scale remains at an ample level above US$3 trillion, supported by steady macroeconomic performance, resilient foreign trade, and stable cross-border capital flows. Pang added that the current reserve level remains at a historical high and is sufficient to absorb changes in the external environment.
The same report cited Wen Bin, chief economist at Minsheng Bank, who expects China’s exports to retain strong resilience and continue to anchor the balance of payments. He pointed to a September agreement between China and the United States on a framework for reciprocal tariff reductions worth US$30 billion — concentrated in categories such as toys, home appliances, baby products and festive gifts — as a factor that could improve related consumer-goods exports, alongside market diversification and supply-chain advantages.
Gold Buying Streak Continues
Alongside the FX data, the People’s Bank of China reported that its gold reserves rose to 77.47 million ounces at the end of September, up 740,000 ounces from the end of August — a 23rd consecutive month of purchases, according to Yicai. The increase accelerated from August’s 650,000-ounce gain, indicating the central bank used a pullback in gold prices to keep building its position.
The trend reflects a broader global shift in which central banks are treating gold less as a passive historical legacy and more as an actively managed strategic reserve asset. Structural demand from central-bank buying and net inflows into gold exchange-traded funds has provided support for prices even as a strong dollar weighs on the metal.
The US Rate Factor
The reserve data is closely tied to expectations around US monetary policy. As Yicai reported, rising market expectations of US interest-rate increases and a firmer dollar index have weighed on gold prices even as structural demand supports the metal. Those same forces shape China’s headline reserve figure: a stronger dollar lifts the dollar value of currency conversions but erodes the value of non-dollar reserve assets.
In the current environment, the September decline is best understood as a valuation adjustment rather than evidence of stress, a reading supported by the analyst commentary carried by China News Service covering the same September data. As Pang Ming of the China Chief Economist Forum put it, the change reflects shifts in international financial markets rather than any marked change in foreign exchange supply and demand, with the reserve stock still at a historically high level capable of absorbing external shocks.
What’s Next
Analysts expect China’s exports to retain strong resilience and continue to anchor the balance of payments, with foreign direct investment also likely to remain favorable.
For now, the September dip appears to be a valuation story rather than a signal of capital flight. The key variables to watch are the trajectory of the US dollar, the pace of US rate expectations, and whether China’s export strength can keep the reserve stock comfortably above the US$3.4 trillion line in the months ahead.