China is buying huge gold reserves worth £135bn, raising fears that Beijing is preparing to invade Taiwan and protect its economy in the event of Western sanctions.

China is buying gold at record rates in a move that experts say could mean it is preparing to safeguard its economy against Western sanctions ahead of a possible invasion of Taiwan.

The Central Bank launched its gold buying spree in October 2022, accumulating hundreds of tons of the precious metal in the last 18 months.

A World Gold Council report said China now owns a staggering 2,262 tonnes of gold worth around $170.4bn (£135bn) and Beijing has meanwhile dumped more than $400bn. in US Treasury bonds from 2021.

There is also speculation that China has significantly larger gold reserves than the officially announced total.

The concerted effort to invest in the historically stable asset while reducing huge amounts of US debt has led analysts to suggest that China is trying to reduce its dependence on the US dollar, which would in turn mitigate the impact of any sanctions. economic imposed by the West.

It comes as tensions with Taiwan, the Philippines and other US allies in the South China Sea continue to rise, with Chinese military aircraft routinely embarking on threatening sorties towards the island.

Taiwan reported renewed Chinese military activity near the island on Saturday, with 12 aircraft crossing the sensitive median line of the Taiwan Strait just a day after US Secretary of State Antony Blinken left Beijing following a tense visit. diplomat.

The democratically governed island has faced increased military pressure in recent months from China, which considers the island its own territory.

Taiwan’s Defense Ministry said that since 9:30 a.m. (01:30 GMT) on Saturday it had detected 22 Chinese military aircraft, including Su-30 fighters, of which 12 had crossed the median line to the north and center. from Taiwan.

The line once served as an unofficial border between the two sides over which neither side’s military crossed, but China’s air force now regularly sends planes over it.

China says it does not recognize the line’s existence and President Xi Jinping has openly stated his desire to “reunify” Taiwan with the mainland, by force if necessary.

Jonathan Eyal, associate director of the Royal United Services Institute (RUSI) think tank, said of China’s gold strategy: “The relentless buying and sheer quantity are clear signs that this is a political project that China’s leaders Beijing gives priority because what they see is an imminent confrontation with the United States.

“Of course, this is also related to plans for a military invasion of Taiwan,” he said. The Telegraph.

He went on to speculate that China’s decision to diversify its investments and dump American debt was sparked by Russia’s invasion of Ukraine and the resulting torrent of Western sanctions imposed against Moscow.

More than $300 billion in Russian assets have been frozen in Europe and the United States, a huge financial hit as the Kremlin seeks to finance its ongoing war.

John Reade, chief market strategist at the World Gold Council, told FOOT that sanctions against Russia’s central bank sparked a surge in gold buying among countries not aligned with the West and “caused many non-aligned central banks to reconsider where they should keep their international reserves.”

He added: “Countries have recognized that the gold held by Russia, because it is outside anyone else’s control, is useful in situations where no other reserves may be accessible.”

China’s relationship with the West, particularly its great rival the United States, is difficult to say the least.

China’s threatening rhetoric toward Taiwan and rising tensions in the South China Sea with U.S. allies in the region, particularly the Philippines, is just one of several points of contention between Beijing and Washington.

US Secretary of State Blinken’s brief visit to Beijing was emblematic of the broader relationship: The diplomat and his Chinese counterpart expressed a desire to improve ties but each issued warnings about the potential for a rift.

“Overall, the China-U.S. relationship is beginning to stabilize,” Chinese Foreign Minister Wang Yi told Blinken at the start of a long day of talks last week.

‘But at the same time, the negative factors in the relationship continue to increase and consolidate and the relationship is facing all kinds of disturbances.

‘Should China and the United States continue in the right direction of moving forward with stability or return to a downward spiral?’ he asked her rhetorically.

The minister went on to describe a series of complaints maintained in Beijing about what he considers to be US interventionist policies and positions in the South China Sea, Taiwan, human rights and China’s right to maintain relations with countries it considers appropriate. .

“China’s legitimate development rights have been unjustifiably suppressed and our core interests face challenges,” he said.

‘China’s concerns are consistent. “We urge the United States not to interfere in China’s internal affairs, not to curb China’s development, and not to step on China’s red lines on sovereignty, security and development interests.”

Blinken, in turn, warned Yi that China faces US sanctions if it continues to boost the Russian arms industry, an accusation that Beijing refutes.

Although China has not exported weapons directly to Russia, the United States believes Beijing is supplying Moscow with a variety of vital materials for military equipment, from components for cruise missile engines to ceramics used in body armor.