China’s foreign exchange reserves grew nearly $50bn in the last quarter of 2005 to reach $819bn, putting its reserves on track to surpass Japan this year as the world’s largest.

The increase of $209bn in China’s reserves last year, slightly higher than the $207bn rise in 2004, came as a soaring trade surplus offset a decline in inflows of speculative capital from investors betting on a revaluation of the renminbi.