In 2023, the People's Bank of China (PBOC) bought a record 225 tons of gold. As of May 2024, China has added gold to the PBOC's reserves for 18 consecutive months. According to the World Gold Council, in January and February 2024, the PBOC bought an additional 22 tons of gold. Currently, there are 2,257 tons of gold sleeping in the PBOC's reserves.
Ms. Isabelle Feng, an expert at the Center for Asian Studies in Paris (France), said that China's economy is gloomy due to the impact of the prolonged real estate crisis, as well as after 3 years of closure to fight the Covid-19 pandemic.
According to government reports, by 2022, real estate accounts for 70% of a family's assets. The decline in real estate prices has caused many difficulties for people. Therefore, those who still have a little ability will save money by buying gold, which can also be considered the only way to save.
According to the US news agency Bloomberg, in parallel with the massive gold purchases, Beijing has been continuously selling some of the US bonds it holds. By the beginning of 2024, China will only hold $775 billion in US bonds, instead of $1,100 billion three years ago.
Like most countries, China relies heavily on the US dollar for trade transactions, and especially so far, the US dollar is still the yardstick for energy and raw material import and export activities, used to pay for 50% of total global trade.
China’s gold rush is thus understood as the first step for Beijing to “detox” from the USD. Along with the gradual move away from the USD orbit, China is lobbying the BRICS group of emerging economies, developing countries that trade heavily with China, to use the yuan more.
Thanks to the USD, the US can borrow at cheaper interest rates than any other country. Washington has a wide range of ways to use this currency as a diplomatic tool, even a weapon, to impose sanctions on opponents and even allies. Therefore, China is implementing the goal of imposing its own currency to strengthen its economic and geopolitical position with the rest of the world.
PEARL
Source: https://www.sggp.org.vn/trung-quoc-tach-khoi-dong-usd-post741148.html
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