China's foreign currency reserves stood at more than $1 trillion (£512.9bn) by the end of 2006, official figures show.
Critics say the yuan is kept artificially weak to boost exports
The reserves increased by $78.4bn in the last three months of last year, marking 2006's biggest quarterly leap.
China's reserves have grown as the central bank has bought US dollars to hold down the yuan's value, which has made China's exports more competitive.
Separate data on Monday showed foreign direct investment was 5% up on 2005, the official Xinhua news agency said.
Stripping out investments in the financial sector, foreign direct investment (FDI) totalled $63.02bn in 2006, a 4.47% rise from 2005, according to the Commerce Ministry.
China's economic growth makes it increasingly attractive to outside investors.
The country's foreign reserves now stand as the largest pool of foreign currency worldwide.
The increase in reserves may give more ammunition to those who argue that China's currency policy, by keeping the yuan artificially weak, gives Chinese firms an unfair advantage, especially over US companies.
While the exact composition of China's reserves is unknown, many think about 70% are in dollar-denominated bonds.