China’s foreign-exchange reserves jumped by a record 7.5% during the fourth quarter, increasing inflation concerns, The New York Times reported Tuesday.
China logged about $2.85 trillion of foreign-exchange reserves at the end of the fourth quarter, up $199 billion from a quarter earlier, the newspaper said. Reserves had already increased by $194 billion during the third quarter, although about half of that jump came from euro appreciation and interest payments.
As foreign currencies have grown in value, the Chinese government has been rapidly printing the renminbi. That’s kept its value comparatively low and helped Chinese exporters retain a competitive advantage. China’s fourth-quarter money supply jumped 20% from a year earlier, higher than the 19% increase forecast by economists.
Nonetheless, China’s consumer price index in November rose 5.1% from a year earlier, the Times reported. The nation’s trade surplus, as well as the growth of foreign investment in China, has helped to spur the growth. And Chinese economists say true inflation is likely even higher because the index excludes higher home-ownership costs and tracks some items that are no longer popular, according to the Times.
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