Over the past few years, China has been rapidly increasing its gold reserves while simultaneously reducing its holdings of U.S. debt. This shift has garnered international attention, prompting speculation about China’s broader economic strategy and its potential global implications.
China’s Growing Gold Reserves
Since the beginning of the 21st century, China’s gold reserves have been steadily rising. However, a noticeable acceleration has taken place since 2019. In 2019, China held 1,950 tonnes of gold, which grew to 2,010 tonnes in 2022. By October 2024, this figure had surged to over 2,280 tonnes. While this increase may not seem dramatic, it has positioned China as one of the largest holders of gold globally—ranking above Switzerland, Japan, and several European nations.
Despite these significant purchases, China’s total gold reserves still make up only a fraction of its foreign reserves, which exceed $3 trillion. At current market prices (around $2,857 per troy ounce), China’s gold reserves are valued at approximately $210 billion. However, what makes this trend important is that China has consistently been one of the world’s top gold buyers in recent years. In 2023, China emerged as the single-largest buyer of gold, acquiring 224.88 tonnes—outpacing Poland and Singapore. Even in 2022, China was the second-largest buyer, purchasing 62.21 tonnes. Although in 2024 China dropped to the fourth-largest buyer, its aggressive accumulation over the past several years remains noteworthy.
Why This Matters: Global Economic Implications
China’s increasing gold reserves signal an important economic strategy. One key factor is that gold as a percentage of China’s total foreign reserves has grown significantly. Before the COVID-19 pandemic, gold accounted for less than 3% of China’s reserves. As of January 2025, this figure had risen to over 5.9%. This trend coincides with China’s continued divestment from U.S. debt, a shift often described as “de-dollarization.”
China, once the largest foreign holder of U.S. Treasuries, has been selling off its holdings at a rapid pace. This move suggests an effort to reduce its exposure to the U.S. financial system and lessen its reliance on the U.S. dollar for trade, investment, and foreign exchange reserves.
The Global Impact of China’s Gold Accumulation
China’s large-scale gold purchases influence global gold prices. When China actively buys gold, it provides price support and can help stabilize the market during periods of turbulence. Conversely, if China were to halt or reverse its purchases, it could lead to increased volatility. Analysts from institutions like JPMorgan and Pimco suggest that ongoing gold accumulation by China and other emerging markets may push gold prices above $3,000 per ounce in the coming years.
Additionally, China’s shift from U.S. Treasuries to gold could have broader implications for the global financial system. As China and other emerging markets diversify away from dollar-denominated assets, demand for U.S. debt may weaken, potentially leading to higher borrowing costs for the U.S. government. If other nations follow China’s lead, the U.S. dollar’s dominance in global finance could gradually erode, leading to a more multipolar financial system with increased market volatility.
China’s Foreign Reserves: Then and Now
A closer look at China’s foreign reserves provides further insight into this shift. In 2019, the majority of China’s official reserve assets consisted of foreign currency reserves and securities, primarily U.S. dollar-denominated assets, including Treasuries. Gold accounted for a relatively small percentage, valued at approximately $95.4 billion.
By 2025, China’s foreign currency reserves have remained relatively constant at around $3.2 trillion, but gold holdings have more than doubled to over $200 billion—a 116.5% increase. This reallocation highlights China’s commitment to reducing reliance on U.S. assets and increasing its holdings in tangible, historically stable assets like gold.
The Possibility of Undisclosed Gold Reserves
While official data presents a clear trend, some analysts speculate that China may be underreporting its actual gold reserves. Reports suggest that China has been accumulating gold through state-owned banks and other undisclosed channels to minimize market disruptions. If true, China’s actual gold holdings could be significantly higher than reported, further amplifying its economic shift away from the U.S. dollar.
How This Benefits China’s Economy
China’s aggressive gold buying is part of a broader effort to insulate itself from financial pressures and potential sanctions from the United States. Geopolitical tensions, particularly in light of the sanctions imposed on Russia, have prompted many countries to reconsider their reliance on dollar-denominated assets. By diversifying its reserves, China aims to safeguard its economy against potential financial disruptions and external pressures.
Another motivation for increasing gold reserves is to align with other major economies. Countries like the United States, Germany, and France hold substantial gold reserves relative to their total foreign reserves. For instance, gold accounts for over 70% of Germany’s, France’s, and Italy’s total reserves. In contrast, China’s gold reserves remain relatively small. Increasing gold holdings brings China’s reserve strategy closer to that of other developed nations while reducing its dependence on foreign securities, particularly those denominated in U.S. dollars.
Conclusion: A Strategic Economic Shift
China’s gold accumulation is not just about geopolitics—it is also about economic security and stability. By shifting its reserves toward gold, China is positioning itself for a future where the U.S. dollar may no longer be the world’s undisputed reserve currency. This strategy not only enhances China’s financial independence but also influences global markets, impacting gold prices, U.S. debt demand, and the international financial system.
While it remains uncertain how quickly these changes will materialize, China’s gold buying spree is a trend that warrants close attention. As China continues to diversify its foreign reserves, the global economic landscape may undergo significant transformations in the years to come.