• Though official intervention remains smaller than in the past, China’s reserve accumulation over the past year is running at the highest level since 2014;

• This is true in quarterly BOP data through Q3 and also in more recent high-frequency proxies;

• Such intervention is becoming increasingly overt and more pronounced even as “stealth” accumulation by the banking system continues;

• This is suggestive that further RMB strength is unwelcome despite China’s growing current account surplus.

We have been tracking how the pandemic shock has impacted China’s balance of payments, including the sharp rise in foreign asset accumulation by the banking system through “stealth intervention” for more than a year (link, link, link, link). And last month we highlighted how the return of global imbalances has increasingly involved cross border portfolio equity flows rather than central bank reserve accumulation (as was the case before the GFC - link).