The reserves, already the world's largest, expanded by 17.8 percent or $186 billion over the first half of the year, the central bank said. It said the increase in June alone was $42 billion - nearly equal to growth for the full final quarter of last year.
China's reserves have ballooned as the central bank buys up dollars generated by its huge trade surplus and influx of investment. The latest upturn despite a trade slump suggests the difference was being made up by an increase in foreign investment flowing into China.
China's reserves are more than double those of No. 2 Japan, which has $988 billion.
Chinese leaders have expressed concern about the stability of the U.S. dollar and the value of Beijing's vast holdings of American government debt. China is Washington's biggest foreign creditor and is believed to keep almost half of its reserves in U.S. Treasurys and notes issued by government-affiliated agencies.
Despite such concern, the U.S. government says Beijing is continuing to buy substantial amounts of Treasurys.
China's exports fell for an eighth month in June, plunging 21.4 percent from a year earlier, and its global trade surplus narrowed to just $8.2 billion, the second-smallest gap in many years.
China added just $7.7 billion to its reserves in the first quarter of this year as trade and investment plunged due to the global financial crisis. That compared with a $45 billion increase in the final quarter of last year.
The growth in reserves over the first half was down by $95 billion from the expansion in the same period last year, the central bank said.
Meanwhile, foreign direct investment in China fell in June for the ninth straight month, but the decline narrowed, adding to signs of an economic recovery.
The actual foreign direct investment in June totaled $9 billion, down 6.8 percent from a year earlier, while the number of new approved foreign companies totaled 2,529, down 3.8 percent, commerce ministry spokesman Yao Jian told a news conference.
The FDI drop compared to a 17.8 percent fall in May, likely another sign of improvement in China's economy.
Yao said the scale of investment withdrawal and reductions by foreign companies has increased in the last nine months, battered by the global financial crisis.
"It indicates that we are still facing very big difficulties attracting foreign investment," Yao said.
In the half year ended June 30, actual foreign direct investment in China declined by 17.9 percent, totaling $43 billion, compared with the same period last year.
Yao said recent spy charges against employees of Rio Tinto Ltd., an Australian iron ore supplier, wouldn't affect China's investment environment.
"The confidence of foreign investment in China's legal environment has strengthened during China's 30 years of opening up. This single case won't affect China's trade and capacity of attracting foreign investment at all," Yao said.
China is due to release a slew of economic data, including GDP growth for the first half of the year, on Thursday. Expectations of a revival in the economy have pushed the stock market up to a 13-month high.
Foreign direct investment last year rose 23.6 percent $92.4 billion in 2008 from the previous year, though growth began to weaken toward the end of the year.
(AP)
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