Reasons for the increase of China's foreign exchange reserves

1. Double surplus of current account, capital account and financial account.

Since 1994, China's balance of payments has generally maintained a "double surplus", although the current account and the capital and financial account have changed greatly every year and even have a deficit, especially when they are added together.

This is a high surplus, reaching $223.76 billion in 2005. In 2006, China's current account surplus was $249.9 billion. The surplus of capital and financial projects was $654.38+000 billion.

There are many reasons for China's "double surplus" in international payments. Among them, the most noteworthy are two points: First, China goods with low labor costs have strong

, 1994

The devaluation of RMB caused by the annual exchange rate integration has stimulated the rapid growth of exports and maintained China's international trade surplus. Second, China's labor resources advantages and market potential, as well as China's foreign investment tax collection and management, industrial policies,

All kinds of super-national treatment in market access and other aspects make foreign direct investment in China increase continuously, while China enterprises do not "go out", which leads to capital inflow greater than outflow, and the surplus in financial and capital accounts expands.

2. Compulsory foreign exchange settlement and sale system

After the merger of 1994 exchange rates, financial accounts will be strictly controlled, and a compulsory foreign exchange settlement and sale system will be implemented for current accounts. The system stipulates that apart from allowing some foreign-invested enterprises to open foreign exchange cash accounts,

Foreign exchange in the hands of enterprises and individuals must be sold to designated foreign exchange banks, which must sell foreign exchange beyond the position limit approved by the State Administration of Foreign Exchange in the market. Central banks usually act as market boosters.

Those who buy foreign exchange have accumulated the country's foreign exchange reserves, which has led to its rapid growth. In 2005 and 2006, with the reform of China's compulsory foreign exchange settlement and sale system to the willing foreign exchange settlement and sale system, the foreign exchange settlement and sale system has a great influence on China and foreign countries.

The influence of foreign exchange reserves is gradually decreasing, but it is still the direct institutional reason for the growth of foreign exchange reserves.

3. The exchange rate is not flexible enough

Although China claims to implement a managed floating exchange rate system based on market supply and demand, in fact, in the foreign exchange market, the exchange rate of US dollar against RMB fluctuates within a narrow range. Before the exchange rate reform, the exchange rate was pegged to the US dollar.

Under the system, the exchange rate between RMB and USD is linked, and the range of exchange rate fluctuation is extremely limited. After the exchange rate reform in July 2005, the US dollar was pegged to a basket of currencies, and immediately

Appreciation of 2. 1%. It has appreciated by 3.2% this year, but the exchange rate flexibility is still limited. The government has always regarded maintaining exchange rate stability as one of its macroeconomic goals. Therefore, in order to maintain the stability of the RMB value, the People's Bank of China

The bank has become the final market liquidator in the foreign exchange market. In the case of oversupply of US dollars, the central bank is forced to attract US dollars brought by the growth of foreign trade and foreign investment in the market to maintain the balance between supply and demand in the foreign exchange market, which

Leading to a passive increase in foreign exchange reserves. At the same time, a stable exchange rate eliminates exchange rate risks, promotes China's export trade and increases the international trade surplus; And because it can stabilize the expected investment income and promote the influx and increase of foreign capital.

Increased the capital account surplus.

4. Expectation of RMB appreciation

Since February 2002

Since August, the US dollar began to depreciate as an international currency, largely due to the twin deficits of American trade and finance. People pegged to the dollar, let other currencies depreciate, resulting in currency undervaluation, and the pressure of RMB appreciation rose, which eventually promoted.

July 2005 RMB exchange rate reform. In addition, in recent years, with the rapid development of China's foreign trade and the rapid increase of foreign exchange reserves, especially since the United States, Japan and other countries put forward the requirement of RMB appreciation, the market

The expectation of RMB appreciation is gradually increasing. The expectation of appreciation stimulated the international capital to flow to China.

First, the impact of the increase in foreign exchange reserves on the basic monetary structure.

The total amount of base money put into a country is the debt of the central bank, which must be equal to the assets of the central bank, which consists of two parts; Part of it is domestic credit. The other part is foreign exchange reserves; Therefore, it can be realized that

For this reason, the base currency put in by the central bank consists of two parts: one is the base currency corresponding to domestic credit, and the other is the foreign exchange reserve, which is called foreign exchange appropriation. For example 1993

In, 93% of China's basic currency was domestic credit and 7% was foreign exchange.

Compared with 1993, the growth rate of money input in China is not much different, but the structure of money input has changed greatly, and the proportion of foreign exchange has soared from 7% of 1993 to 1994.

75%。 The reasons for this situation are the increase of foreign exchange reserves and the policy similar to "sterilization" implemented by the central bank. The so-called "write-off" is the basis for a country's monetary authorities to protect the domestic money supply from changes in foreign exchange reserves.

The currency changed accordingly, and the policy of tightening domestic credit was adopted. For example, if the increase in foreign exchange reserves leads to the corresponding increase in the base currency, the central bank will adopt the practice of selling government bonds in the open market to reduce domestic credit.

The total amount, then the impact of the increase in foreign exchange reserves on the total domestic money supply is completely or partially offset. In China, the central bank has tightened the refinancing business of financial institutions because the open market business is still in progress.

Banks set up time deposits and other ways to reduce domestic credit, achieving a similar purpose of "write-off", so that the monetary investment of 1994 basically did not exceed the plan. On the one hand, due to the sharp increase in foreign exchange reserves, the amount of foreign exchange has increased. On the other hand, the state has implemented measures similar to "sterilization" to tighten the domestic currency, so that the growth of the total amount of RMB investment is within the predetermined plan. However, the proportion of foreign exchange in the base currency has risen sharply, which has changed the structure of the base currency. Second, the impact of the increase in foreign exchange reserves on China's industrial structure Although China's macro-monetary policy is tight at present, the increase in foreign exchange reserves and the introduction of foreign exchange accounts have enabled China's export-oriented units to obtain relatively abundant RMB funds due to the settlement of foreign exchange, thus the development conditions of these enterprises are relatively relaxed. In order to clearly analyze the impact of the increase of foreign exchange reserves on China's economic structure, we divide China's economic sectors into two parts: export-oriented and inward-oriented sectors. Export-oriented enterprises can obtain relatively abundant funds under the current macroeconomic tightening conditions, which greatly promotes their production. The reason is: 1, a large number of raw materials are transferred to the foreign trade department. Due to the current macroeconomic tightening, the market of production materials is relatively depressed, and the prices of raw materials have fallen. In this case, export-oriented enterprises can use abundant funds to buy raw materials and machinery and equipment with relatively low prices, which provides conditions for them to expand reproduction in the next two years.

2. Technicians and labor can be further transferred to export-oriented enterprises. At present, due to the country's macro-austerity, lack of funds and low operating rate, many laid-off workers in state-owned enterprises have further increased, which has had a negative impact on labor.

The demand for force tends to decrease. However, because the central bank and foreign exchange funds are relatively abundant, export-oriented enterprises still have the potential to expand production. This will certainly promote the upward flow of labor force in export-oriented enterprises.

It provides conditions for further development in the next two years.

3. A large part of the growth of foreign exchange reserves comes from foreign direct investment in China. Under the condition of macro-austerity in China, foreign capital still keeps growing, which enables foreign-funded enterprises to obtain foreign exchange.

Most of them are well-funded and developing rapidly. Most foreign-funded enterprises are export-oriented enterprises, which means that the proportion of export-oriented enterprises in China's economic structure has further increased.

Of course, this paper only analyzes the possible structural impact of the increase in foreign exchange reserves on China's economy under the conditions of macroeconomic contraction. As for whether export-oriented enterprises will have further development in the next two years, they will also be affected by other factors.

The influence of some economic factors. For example, domestic inflation is too high and RMB appreciates slightly, which may be a big obstacle to the development of export-oriented enterprises, because under such conditions, the production costs of export-oriented enterprises are increasing.

High, but due to the appreciation of the local currency, the RMB price of its export products is falling! Third, the impact of the increase in foreign exchange reserves on inflation in China.

The increase in foreign exchange reserves since 1994 has led to an increase in the amount of foreign exchange in the base currency, which has increased the amount of money invested through the multiplier effect of money. Some scholars in China think that this country is 1994 and 1995.

One of the reasons for domestic inflation. In fact, it's not entirely true: China has adopted a policy similar to "sterilization" while increasing its foreign exchange reserves, that is, tightening domestic credit to a greater extent than originally planned, making China's base currency.

The increment of circulation has not improved significantly compared with previous years; The issuance of this monetary increment is basically absorbed by the growth of gross national product. In this way, the increase of foreign exchange reserves leads to excessive money supply, which leads to

Inflation is hard to sustain.

However, the growth of foreign exchange reserves will have an impact on China's inflation in the next two years. However, this effect is not through the mechanism of promoting the growth of base currency circulation, nor is it a general increase in prices, but may lead to.

A kind of structural inflation. More precisely, major changes in the proportion of foreign exchange and domestic credit in the base money supply may have a structural impact on inflation in China.

On the one hand, due to the investment of foreign exchange, export-oriented enterprises have relatively sufficient funds and sufficient production development potential, and the production scale of enterprises has a trend of continuous expansion. They are interested in some raw materials and basic industries in the next two years.

The demand for products will continue to expand, and the demand for skilled labor will further expand. The expansion of foreign direct investment in foreign exchange reserves will aggravate this demand trend. On the other hand, due to the country's macro-monetary tightening, inward-looking enterprises are short of funds. In order to offset the impact of foreign exchange holdings, the central bank implemented a policy similar to "write-off", further tightening domestic credit than originally planned. As a result, the raw material industry has less funds, lower output, brain drain and shrinking production and supply capacity of basic industries such as raw material industry.

The combined effect of the above two factors will make the market of production materials in short supply and the price of raw materials tend to rise in the next two years, thus triggering structural inflation. In addition, the expansion of labor demand of export-oriented enterprises

Large, will further improve the wage level of such enterprises, due to the demand-side competition in the labor market and the usual wage comparison mechanism between export-oriented and inward-oriented enterprises, the overall wage level will be further improved, and through the cost.

The promotion mechanism has aggravated inflation in China. Four. The influence of the increase of foreign exchange reserves on the government's macroeconomic policies In the case of relatively small foreign exchange reserves, the proportion of foreign exchange in the base currency is relatively small, so it is not necessary for the state to focus on the influence of foreign exchange in macroeconomic regulation and control. However, after the increase of foreign exchange reserves, the government must consider its possible influence and interference when formulating monetary policy. 1, the impact on the traditional macro-control mode.

At present, the main tools of China's monetary policy are planned credit and statutory reserve ratio, among which the traditional tool of planned credit is widely used: the state issues a credit plan at the beginning of each year and puts in money during the year.

The total amount must be limited to the plan. After the increase of foreign exchange reserves, domestic credit must be further tightened to prevent the quota from exceeding the standard. The increase of foreign exchange reserves is not predictable and decided in advance, but "unplanned".

It is impossible to accurately consider the plan when making a credit plan. In this way, the central bank can only be in a passive position on this issue when using traditional control tools. 2. Impact and intervention on monetary policy.

Only a small part of the new foreign exchange reserves comes from the current account surplus, and a large part comes from speculative capital in the capital account. At present, the domestic interest rate is several times higher than the international interest rate, and so is the RMB exchange rate.

With steady growth, more than 20 listed companies in China have issued shares overseas. These factors make a large number of international hot money enter China for arbitrage. This part of the capital is different from the domestic direct investment capital, they are profitable.

In the future, there is no profit to go, and its flow direction has great uncertainty and randomness. Once the international economic and financial situation changes, a large number of speculative capital outflows will suddenly reduce China's foreign exchange reserves, leading to domestic monetary tightening. Only monetary authorities

Be able to adapt passively, relax the money supply and avoid the tight economic environment. However, the biggest feature of working capital is its uncertainty, and the response of the monetary authorities is bound to be relatively slow and lagging behind, making it difficult to grasp the strength, thus making China's economy

The economy is vulnerable to the world economic turmoil. 3, the impact on the current economic "soft landing" goal.

At present, the central bank's goal is macro-tightening and monetary tightening, and strive to achieve a "soft landing" of the economy. The sharp increase in foreign exchange reserves has led to the introduction of high-energy currency, which has brought difficulties to the realization of this policy goal to a certain extent.

Degree. With the increase of foreign exchange, peers have to further tighten domestic credit, which makes inward-oriented enterprises suffer more austerity than originally planned, while export-oriented enterprises are relatively loose, thus affecting the normal industrial restructuring.