China has nearly doubled its gold reserves in the last five years as it diversified its enormous foreign exchange reserves away from US dollar assets.

The country now holds 1,054 tons of gold, up from the 600 tons it last disclosed in 2003, according to Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE) , which manages the country’s $1,954bn in foreign exchange reserves.

“China still has only a very small percentage of its forex reserves held in gold, much less than the United States or other developed countries,” said Paul Atherley, Beijing-based managing director of Leyshon Resources. “Those holdings are still too low in terms of the size of its economy and the growing significance of its currency.”

At current prices, China’s reserve of gold only accounts for around 1.6 per cent of its entire foreign exchange reserves. The value of its total holding was reported as $31bn.

The move comes as European central banks continue to sell their gold and the International Monetary Fund has discussed selling some of its bullion reserves.

China now has the fifth-largest gold pile of any country and is one of only six countries with public holdings of more than 1,000 tons, according to Ms Hu.

Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tons.