Under the new normal, China's economic development presents new features. From the inside, the shift of economic growth and the gradual release of domestic demand. China has a vast domestic market space, a large population and great regional differences. The release of domestic demand provides new investment opportunities for China's economic growth in the future. Externally, China is changing from a big trading country to a big foreign investment country. The implementation of the "going out" and "One Belt, One Road" strategies of China enterprises and the process of foreign investment have been accelerated, and domestic residents also have realistic needs for overseas asset allocation. With the stability of economy and exchange rate, China will face a new historical opportunity of RMB internationalization and capital account opening.
At present, China's abundant foreign exchange reserves have created favorable conditions for China's foreign investment. Foreign investment is also conducive to the more effective distribution of national wealth. In addition, with the improvement of RMB's international status, China's dependence on foreign exchange reserves and the necessity of maintaining large-scale foreign exchange reserves will decrease. The scale of China's foreign exchange reserves should also be adapted to the stage of economic development.
The transformation from a big trading country to a big foreign investment country
China used to be a country with a net inflow of foreign capital, but at present, China's foreign direct investment has exceeded the scale of attracting foreign capital in the same period, and it has gradually entered a new stage of capital export, changing from a big trading country to a big foreign investment country.
First, as a global trading power, China is already the largest exporter and the second largest importer of goods, so it is difficult to increase its share in world trade. In 20 15, China's goods exports accounted for 13.8% of the world, which was about 10 percentage point higher than that of 2000 and 10 percentage point higher than that of Japan, which ranked second in foreign exchange reserves. The ratio of China's current account balance to GDP is 2. 1%, which is 1.3 percentage points higher than that of Japan. China's international trade accounts for 22.3% of GDP, which is 3.4 percentage points higher than that of Japan. Second, with the shift of economic growth, the return on investment has declined, making it difficult for China to attract foreign investment to reach the previous level. From 1990 to 2007, the proportion of FDI in GDP in China increased from 0.97% to 4.4%; Since the international financial crisis in 2008, the scale of foreign direct investment relative to GDP has generally declined. In 20 15, the proportion of FDI in GDP dropped to 2.27%.
The gradual transformation from a big foreign trade country to a big foreign investment country is the road that many developed economies have taken. Foreign investment is also closely related to a country's economic stage. At the constant price of $20 10, China's per capita GDP in 1978 was only $308, making it one of the poorest countries, not to mention foreign investment at all. China experienced rapid growth after the reform and opening up. In most years of the past 20 years, the trade and investment items of China's balance of payments showed a "double surplus". While the foreign exchange reserves are increasing, the pressure of foreign exchange reserve management is also relatively great. Relevant theoretical research shows that with the sustained development of economy and the accumulation of enterprise advantages, the net foreign investment of countries with per capita GDP above $4,750 is generally positive. In 20 15, the per capita GDP of China has exceeded 6,000 US dollars, and the foreign capital flow has reached 654.38+045.67 billion US dollars, exceeding the scale of attracting foreign capital. From the second half of 20 14 to the end of 20 16, the total flow of China's foreign direct investment was about US$ 467 billion, which was 3.5 times of the accumulated net flow of financial accounts in the same period.
In addition, China's external financial assets are mainly concentrated in government departments, mainly foreign exchange reserves, while the wealth of non-government departments is mainly in domestic assets, so it is really necessary to increase the allocation of overseas assets. From the structure of foreign assets, by the end of 20 16, foreign exchange reserves accounted for nearly half of China's foreign assets (47.9%); In contrast, the Japanese housing sector holds more than 80% of external net assets. Therefore, the resident departments in China have a greater demand for overseas asset allocation. In 20 16, overseas securities investment through QDII, RQDII and Hong Kong Stock Connect increased by nearly $10 billion, an increase of about 30% over 20 15; Assets such as deposits, loans and trade credits increased by about $300 billion, an increase of about 1.5 times compared with the same period of last year. The average ratio of foreign assets held by the private sector in G20 countries to GDP is 1.24%. Taking this as a reference, China residents still have a lot of room to gradually increase their foreign assets. By the end of 20 15, the proportion of overseas assets held by China's private sector in GDP was only 25.9%.
The foundation and prospect of RMB internationalization are still improving.
First, China's economic strength ranks among the top in the world, and its comprehensive national strength is the best endorsement of national credit. By the end of 20 15, China's total economic output accounted for 15% of the world, making it the second largest economy in the world, with a contribution rate of 33.2% to the world economy. At present, the economic growth rate is still much higher than the world average. Moreover, China's economic reform will release more potential and have valuable investment opportunities both at home and abroad. Internally, China has a vast domestic market, a large population and great regional differences. The release of domestic demand provides a new growth point for China's economy in the future. Externally, accelerate the implementation of the "going out" and "One Belt, One Road" strategies, and accelerate the process of China enterprises' foreign investment.
Second, the RMB has become one of the international reserve currencies. At the end of the first quarter of 20 17, the international monetary fund (IMF) disclosed the foreign exchange reserves of RMB for the first time. The currencies listed separately in the quarterly survey of the composition of official foreign exchange reserve currencies of the International Monetary Fund are usually regarded as reserve currencies. By the end of 20 16, among the foreign exchange reserves held by various countries, RMB reserves were about $8,456,438+0 billion. According to the IMF's survey in 2014 ~ 2015, the number of countries holding RMB assets has increased compared with 20112, which is equivalent to the number of countries holding Swiss francs as reserve assets.
Third, the RMB exchange rate formation mechanism is gradually developing in a more market-oriented direction. The Central Economic Work Conference and the government work report in 20 17 both emphasized the need to strengthen exchange rate flexibility and adhere to the direction of exchange rate marketization reform. Breaking the unilateral expectation of RMB and realizing the two-way fluctuation of exchange rate have, to a certain extent, increased the resilience of China's economy to external shocks, which is conducive to maintaining the stable position of RMB in the global monetary system. According to the latest triennial survey released by the Bank for International Settlements (BIS), the trading volume of RMB in the global foreign exchange market has increased. By April of 20 16, the average daily trading volume of RMB had risen from 120 billion dollars three years ago to 202 billion dollars, accounting for 4% of global foreign exchange transactions, 2 percentage points higher than the previous 2%.
Fourth, with the gradual opening of the capital account, the degree of opening of China's bond market has been continuously improved in recent years, and the subject of cross-border use of RMB is expanding from traditional industrial and commercial enterprises to overseas sovereign institutions, overseas individuals and other subjects.
China has abundant foreign exchange reserves.
After a difficult accumulation period at the beginning of reform and opening up, China's foreign exchange reserves began to grow rapidly in the 1990s. In 200 1 year, China joined the WTO, and its foreign exchange reserves in that year exceeded 200 billion US dollars. In the process of China becoming a "world factory", the foreign exchange reserves have increased greatly. In 2006, China surpassed Japan to become the largest foreign exchange reserve. In that year, the contribution rate of net exports of goods and services to GDP was as high as 15. 1%, and foreign exchange reserves reached 106634 billion US dollars. After the outbreak of the international financial crisis, China's economy maintained a high growth rate despite weak external demand, with an average GDP growth rate of 8.8% from 2009 to 20 14. In April 2009, China's foreign exchange reserves exceeded US$ 2 trillion for the first time, US$ 3 trillion in March of 201year, and reached a historical peak of US$ 3.99 trillion in June of 201year, double that of five years ago (2009). From the second half of 20 14, the scale of China's foreign exchange reserves began to decline. In 20 15 years, China's foreign exchange reserves decreased by 51265.6 billion US dollars. Since the second half of 20 16, China's foreign exchange reserves have been declining for several months. 20 17 February, China's foreign exchange reserves ended the decline for seven consecutive months. At the end of March, 2065438+2007, the balance of foreign exchange reserves recovered to $3,009.09 billion, an increase of $3.96 billion from the previous month.
The change in the scale of China's foreign exchange reserves, whether it is rapid growth or decline in recent years, is a normal phenomenon to adapt to the stage of China's economic development. As foreign exchange reserves are essentially endorsements of national credit, the continuous accumulation of foreign exchange reserves can meet the needs of importing and stabilizing financial markets. With the improvement of RMB internationalization, China's dependence on foreign exchange reserves may further decline.
Judging from the absolute scale of foreign exchange reserves and the usual international standards, China's foreign exchange reserves are sufficient.
China's foreign exchange reserves rank first in the world.
Judging from the scale of foreign exchange reserves, by the end of 20 15, the top five countries were China, Japan, Saudi Arabia, Switzerland and South Korea. As the country with the largest foreign exchange reserves, China accounts for about 30% of the world's foreign exchange reserves, which are 2.8 times and 5.4 times that of Japan and Saudi Arabia respectively, and nearly 10 times that of India and Brazil. As the country with the largest economy in the world at present, the foreign exchange reserves of the United States have just exceeded $654.38+000 billion.
China's long-term stable current account surplus is still the basis for the growth of foreign exchange reserves. In 20 16, China's current account surplus was $242.9 billion, including $485.2 billion in trade in goods and $242.3 billion in trade in services. In addition, the return on investment brought by increasing foreign investment will also become a new source of future balance of payments surplus. In 20 15, China's foreign direct investment flow jumped to the second place in the world, reaching a record high of1456.7 billion US dollars, accounting for 9.9% of the global flow share, up by 18.3% year-on-year, and the amount was second only to that of the United States (299.96 billion US dollars), ranking second in the world for the first time (the third was Japanese). In 20 16, China's foreign direct investment increased by $211200 million, an increase of 12% over the previous year.
The balance of foreign reserves is sufficient to meet the prevention needs of China.
Import coverage and short-term foreign debt repayment ability (foreign exchange reserves/short-term foreign debt balance) are two classic indicators to measure the adequacy of foreign exchange reserves. The index of import payment ability is more suitable for countries with low capital account openness. The ability to repay short-term foreign debts is very important for coping with the crisis and suitable for emerging market countries.
From the perspective of import payment ability, by the end of 20 16, China's foreign exchange reserves can support imports for 22.8 months, far higher than the international early warning standard (3-4 months). Judging from the repayment ability of short-term foreign debts, by the end of 20 16, China's foreign exchange reserves are 3.2 times of short-term foreign debts (local and foreign currencies), while the international early warning standard is not lower than 1 times.
The International Monetary Fund (IMF) also provides an analytical framework for evaluating the adequacy of foreign exchange reserves. Under this framework, the adequacy standard of foreign exchange reserves depends on the specific conditions of different economies, and the desirable scale of foreign exchange reserves is related to a country's economic and financial structure. For emerging market countries, export volume, short-term foreign debt, other liabilities and broad money should be comprehensively considered, and the above four different weights should be given (the weights can be adjusted according to the opening degree of capital account and exchange rate arrangement) to measure the adequacy of foreign exchange reserves, so as to cope with the risks of falling export income, debt extension and capital flight. The calculation results of table 1 give the reasonable scale of China's foreign exchange reserves under different conditions, which can be used as a scenario analysis of China's foreign exchange reserves adequacy. Considering the current economic situation and financial arrangements in China, the desirable scale of China's foreign exchange reserves is about 1.6 trillion ~ 1.8 trillion US dollars. In other words, China's current foreign exchange reserves are equivalent to 170.0% ~ 177.8% of the IMF standard. In addition, the flexibility of RMB exchange rate will be further improved in the future. Under the floating exchange rate arrangement, the scale of foreign exchange reserves that China needs to maintain will further decrease.
The reasonable scale of foreign exchange reserves is still a controversial topic. Because in addition to meeting preventive needs, we also need to consider the cost of holding foreign exchange reserves. Jeanne and Rancière comprehensively consider the benefits, opportunity costs and risk aversion of holding foreign exchange reserves, trying to determine a reasonable level of foreign exchange reserves. The preliminary results show that for most emerging market countries, the optimal foreign exchange reserve scale needs to cover about 80% ~ 100% of the sum of short-term foreign debt and a country's current account deficit, or 75% ~ 150% of the agreed foreign exchange reserve scale based on the IMF framework. According to this standard, China's foreign exchange reserves can fully meet the needs.
Rational management and use of foreign exchange reserves to promote China's foreign investment.
The rational use and management of foreign exchange reserves and the rational allocation of foreign assets are major events related to national welfare. Due to the need to maintain liquidity, the income from holding foreign exchange reserves cannot be very high. According to the statistics of relevant departments, the rate of return on foreign assets in China is only about 3%, while the rate of return on foreign liabilities is about 6%. Foreign exchange reserves that exceed demand also face greater exchange rate risks. Therefore, maintaining excessive foreign exchange reserves is not conducive to the increase of national wealth. We should consider using foreign exchange reserves to support China's foreign investment and re-examine the rationality of China's foreign exchange reserves.
With the increasing use of RMB in international payment and domestic willingness to settle and sell foreign exchange, China's trade surplus is increasingly manifested in foreign assets held by residents. In addition, China's foreign exchange reserves will also be used to support overseas investment and mergers and acquisitions of China enterprises. Foreign exchange reserves are used to set up multilateral financial institutions and funds, such as AIIB and Silk Road Fund, which will also reduce the balance of foreign exchange reserves. Of course, these assets still belong to the "ammunition depot" or "shadow warehouse" of the China government.
Although the accumulation of foreign exchange reserves has slowed down, China's foreign assets are shifting to a more efficient allocation model. As Fan Gang said, the decline in foreign exchange reserves does not mean that US dollars have flowed out of China, but have remained in the accounts of commercial banks. This means that China's official foreign exchange reserves have decreased, but commercial banks in China can use these dollars to invest in other financial assets such as high-yield bonds. This change in allocation mode is also conducive to improving the serious mismatch of China's external assets and liabilities and making the balance sheet of the residential sector healthier. In the past two years, China's banking and non-financial enterprises have adjusted their balance sheets, and the balance of short-term foreign debts has fallen sharply. While the scale of foreign exchange reserves has declined, the external net assets of China's resident departments have increased, and the increase scale is greater than the decline scale of foreign exchange reserves.
Finally, regarding the acceptable scale of foreign exchange reserves, referring to the usual international standards, it only needs less than one-fifth of China's current foreign exchange reserves, that is, less than 600 billion US dollars, which can support imports for three to four months; From the perspective of meeting the demand for short-term foreign debt repayment, by the end of 20 16, China's short-term foreign debt balance was $870.9 billion, and the required foreign exchange reserves were insufficient10 billion. According to the IMF's framework for evaluating the moderate level of foreign exchange reserves, the lower limit of China's moderate level of foreign exchange reserves should be no less than $65,438 +0.6 trillion for short-term foreign debts, other liabilities, broad money and export scale. Therefore, China's current foreign exchange reserves far exceed its demand. Of course, considering China's national conditions, industrial structure, China's position in the world economic and financial system and the process of RMB internationalization, China's foreign exchange reserves should be higher than this international standard, but not as much as possible.
In short, it is necessary to re-examine the rationality of China's foreign exchange reserves, hold foreign assets more scientifically and allocate national wealth more effectively.