China’s foreign exchange reserves rose in May - WSJ

China’s foreign exchange reserves increased by $31.7 billion in May 2026, reaching $3.442 trillion, a 0.93% rise from April’s $3.411 trillion. This marks the highest level since October 2015 and reflects rising global financial asset prices. The People’s Bank of China (PBoC) also continued its 19th consecutive month of adding to its gold reserves, with holdings rising to 74.96 million fine troy ounces in May.

The increase in reserves follows a period of sustained growth, driven by favorable trade balances, strong foreign investment inflows, and a stable yuan. These factors have contributed to a positive balance of payments, reinforcing manage exchange rate volatility. Analysts attribute the recent gains to a temporary tariff truce with the U.S., Beijing’s stimulus measures, and a stronger yuan, which has improved investor confidence and supported trade activity.

Despite the growth, challenges remain. Geopolitical tensions, including the potential implications of a U.S. presidential shift, could introduce new uncertainties for China’s economic trajectory. Additionally, the U.S. freezing of Russia’s foreign exchange reserves has raised concerns about the security of China’s holdings, prompting discussions on diversification and financial infrastructure improvements.

Looking ahead, China’s reserves are expected to remain a key tool for maintaining economic stability and supporting international trade. However, the evolving global financial landscape will continue to test the resilience of China’s economic model and its ability to adapt to external pressures.