“China learned a lesson from the war in Ukraine”. Beijing makes a move that raises fears it is preparing to invade Taiwan

China made record gold purchases and stockpiled $170 billion, a move that has fueled fears that Beijing is preparing its economy for a conflict with Taiwan.

The People’s Bank of China bought 27 tons of gold in the first three months of the year, so its reserves reached a record level of 2,262 tons, according to data from the World Gold Council, writes The Telegraph.

Starting in October 2022, China has been buying gold steadily since October 2022, marking the longest accumulation of the precious metal. Gold reserves rose 16%. Gold is currently trading near a record high of $2,343 an ounce.

Several experts said China’s move was likely an effort to protect its economy against Western sanctions in the event of a conflict with Taiwan.

“The constant purchases and the huge quantity are clear signs that this is a political project considered a priority by the leaders in Beijing. It is linked to plans for a military invasion of Taiwan,” said Jonathan Eyal, associate director at the Royal United Services Institute (RUSI).

President Xi Jinping has repeatedly said he wants to “reunify” China with Taiwan, stressing in his New Year’s speech that it was inevitable that the island nation would fall under Beijing’s control.

Taiwan is a longtime US ally and President Joe Biden has suggested he would be willing to send US troops to defend the island in the event of an invasion.

China’s central bank began buying gold shortly after Western countries froze Russian currency reserves held at foreign central banks in response to its invasion of Ukraine. “There is absolutely no doubt that the timing and sustained nature of the acquisitions is part of a lesson that [China] he learned it from the war in Ukraine,” Eyal said. He added that China would likely build up its gold reserves to protect against dollar sanctions if a major showdown with the West loomed.

China now has the sixth largest gold reserves in the world, just behind Russia.

“The sanctions imposed on the Central Bank of Russia following the Russian invasion of Ukraine in 2022 have made politicians and managers realize that they are more at risk than they thought. If you offend Western powers, then you can lose access to your foreign reserves,” said John Reade, chief market strategist at the World Gold Council.

Beijing’s stockpiles are outstripped by the US, which holds the world’s largest reserves. American investments are worth $602 billion, while Britain holds $23 billion of the precious metal.

China’s urgent move is clear given that it is buying large amounts of gold at a time when prices are at historic highs, Eyal added. The price of the precious metal has risen by almost a fifth over the past year, hitting an all-time high in recent weeks. The increase coincided with fears of spiraling conflict in the Middle East.

“The most important thing is this determination to be independent in both food and finance in order to withstand a long-term confrontation with the United States. I mean not months, but years of confrontation with the United States, the kind that the West has with Russia at the moment,” added the expert Eyal.