Fresh data shows that China's foreign reserves unexpectedly increased in June by about 0.6 percent to 3.119 trillion U.S. dollars. Officials credit the recent depreciation of the U.S. dollar for the increase. They said the depreciation has caused non-U.S. currencies in China's reserves to increase their book value in dollar terms. 

Market expectations for a Fed rate cut have also inflated the prices of U.S. treasury bonds, a large part of China's foreign reserves. China's State Administration of Foreign Exchange said the resilience and opening up of China's economy would continue to support stability in its foreign exchange market.

Analysts were expecting China’s foreign exchange reserves to be volatile and biased toward the downside given trade tensions, but it's been rather resilient.

China’s foreign exchange reserves have increased steadily over the last seven months, except in April, according to Ben Shenglin, dean of Zhejiang University's International Business School. 

"If you look at things from the longer-term perspective, since 2008 for example, China's foreign exchange reserve started from like 1.9 trillion and peaked at about 3.8 nearly 4 trillion (U.S.) dollars, and now still, for the last nine years in a row, it has been above 3 trillion (U.S.) dollars. So, it has been very steady, resilient," Ben told CGTN, adding that it "provides a lot of stability to the rest of the world as well."

Speaking directly to the June increase of about 18 billion U.S. dollars in foreign exchange reserves, Ben attributed the rise to smart portfolio management.

"We have a diverse portfolio. The currencies in the U.S. dollars depreciated against the other currencies, and also we have increased our holdings of gold in our portfolio as well,” Ben said, emphasizing that "in the fundamental sense, the resilience of Chinese foreign exchange reserve is because of the fundamental economic strength of the Chinese economy."

The resilience of China’s foreign exchange reserves helps the Chinese economy. Of the world's top five banks by Tier-1 capital, the top four are Chinese. Chinese banks are becoming more systemically important. Also, the Chinese banking system is the largest in the world, nearly three times China’s GDP.

Ben also pointed out that China has the largest bank in the world. The Chinese banking system has been improving over the last few decades. Some smaller banks have been taken over by larger banks due to liquidity challenges.

Early readings in June have been weaker than expected, with factory activity contracting and growth in the service sector softening, business surveys showed, highlighting the need for more stimulus to stabilize the economy.

China’s second-quarter economic growth slowed further from 6.4 percent in the first quarter. The data will be released on July 15.

China's economic performance in the first half of 2019 was steady, resilient and stable. Analysts said the second half of the year’s GDP would be within the target range, and many analysts are talking about between 6 to 6.5 percent.

Despite all the challenges, China’s exchange rate is one of the most stable ones in the medium to long term, Ben said. "I’m very excited to look at not just second half, few years down the road I feel confident," he said.

Looking ahead, Ben said the global economic and financial situation remained “complex,” but China would continue to push for “high-quality development” and further opening up of its markets to strengthen its resilience and economy.