At the start of the reform era at the end of 1978, China's foreign exchange reserves were minimal, but enough to cover the requirements of a country with a very small import bill.
In the early 1980s, export growth contributed to an initial rise in reserves to a peak of US$17.4bn by 1984. High trade deficits in 1985 and 1986 eroded the reserves in those years.
In 1987 the surplus on trade in services slightly exceeded the merchandise trade deficit, producing a small current-account surplus, and a comfortable net capital inflow helped push up reserves to US$16.3bn. The reserves were held above this level for another two years.
The economic slowdown of 1989-91 produced a sharp fall in imports in 1990, while exports continued to rise, producing a merchandise trade surplus for that year of US$9.2bn, which was gradually eroded in the next three years as imports rose faster than exports. By 1993 the trade and current accounts were in deficit, but the acceleration in inward FDI flows kept foreign exchange reserves rising for most of the rest of the decade.
Joining the World Trade Organisation (WTO) in 2001 contributed to rapid growth in imports, but exports also expanded at a fast pace, while FDI inflows exceeded US$60 billion a year by 2004-2006.
In October 2006, China's foreign exchange reserves exceeded USD1 trillion for the first time.
By the end of September 2008, the reserves topped USD 1.9 trillion, equal to nearly USD1,500 per head for the entire population of China.
It remained around this level until the end of 2008 as trade growth slowed and foreign investment inflows declined.
Then, as 2009 progressed, the upward march resumed, with reserves rising above USD2 trillion in April and reaching a record USD2.447 trillion billion at the end of March 2010.
