Statistics released by the People's Bank of China on June 65438+1October 65438+April 2005 show that by September 2005, the balance of the country's foreign exchange reserves was US$ 769 billion, up 49.5% year-on-year. The combined foreign exchange reserves of Chinese mainland and Hongkong have surpassed those of Japan, ranking first in the world.

According to the financial statistics released by the People's Bank of China in July, as of the end of June this year, China's foreign exchange reserves were 7 1 1 billion dollars, an increase of 1, 0 1 billion dollars over the end of last year, and an increase of 33.7 billion dollars over the same period last year. Considering the sharp increase of foreign trade import and export surplus, it is estimated that the foreign exchange reserves will increase by no less than $200 billion this year, which will be the third consecutive year that China's foreign exchange reserves will increase by more than 1000 billion.

As a symbol of a country's economic strength and financial strength, foreign exchange reserves are the material basis for mediating the short-term imbalance of international payments, stabilizing exchange rates and maintaining international reputation. Adequate foreign exchange reserves play an important role in enhancing national solvency, enhancing domestic confidence in RMB, coping with possible financial risks and safeguarding national economic and financial security. However, the more foreign exchange reserves, the better. Excessive foreign exchange reserves will have many adverse effects.

Second, the crux analysis

The main factors leading to the surge of China's foreign exchange reserves are: the continuous expansion of trade surplus, the constant growth rate of FDI investment and the inflow of short-term speculative capital (hot money).

1, the double balance of payments surplus behind the high foreign exchange reserves

During the period from 1990 to 15 in 2004, there were 12 current account and capital account surplus at the same time, that is, double surplus; The accumulated current account surplus was $256.9 billion, and the capital account surplus was $3 178 billion. In the first eight months of 2005, China's trade surplus in goods reached $60.2 billion, almost twice that of the whole year of 2004. It should be said that the continuous double surplus of China's balance of payments is the inevitable result of China's years of reform, opening up and economic development. The continuous expansion of trade surplus is mainly the embodiment of China's price competitive advantage and comparative advantage in labor resources, material resources and product quality, and it is also an export promotion policy developed in the west based on export tax rebate in China.

China's export control in the field of high-tech products is caused by the state. The resulting increase in imports is less than the increase in exports, leading to a further expansion of the trade surplus, which is one of the main reasons for the rapid increase in China's foreign exchange reserves.

Table1:1China's current account and capital account surplus and foreign exchange reserve balance from 997 to 2004.

(Unit: USD 100 million)

1997 1998 1999 2000 200 1 2002 2003 2004

Current account balance 297 293 211205174 354 459 700

Capital account balance 230-63 52 20 348 323 5271120

Balance of foreign exchange reserves1399145015471656 2122 2864 4033 6099.

Source: Website of State Administration of Foreign Exchange

2. The continuous growth of foreign exchange reserves reflects that China's current investment policy should be adjusted in a timely manner.

Since the reform and opening-up, China has established the concept of FDI promoting economic development, adopted the policy of attracting foreign investment beyond national treatment for overseas investment, and achieved great success in trade surplus and foreign exchange earning through export. According to the latest data from the Ministry of Commerce, although FDI declined in the first half of this year, it also reached $33.048 billion. The promotion of foreign direct investment to China's economy should be affirmed. However, with the improvement of China's investment and legal environment and the enhancement of technological innovation ability, the export competitiveness and profitability of Chinese enterprises have been significantly enhanced, and foreign-invested enterprises have made rich profits, and the expectation of RMB appreciation is generally high. Therefore, under the guidance of "capital chasing profits", international hot money keeps pouring into China, which has formed a new test for China's economic development and foreign exchange reserves.

Third, the harm of disease

With the surge of foreign exchange reserves, the operational risks of China's foreign exchange reserves are also increasing. The high growth of foreign exchange reserves caused by trade surplus leads to trade friction; High foreign exchange reserves bring high exchange rate risks, and small fluctuations in international financial markets and exchange rates of major currencies may bring huge losses to China; The foreign exchange reserves formed by short-term capital inflows are unstable, not to mention speculative risks; The inefficient use of foreign exchange reserves leads to the loss of national wealth; The rapid growth of foreign exchange reserves makes the effectiveness of monetary policy also face severe challenges.

1, the rapid growth of trade surplus leads to frequent trade frictions.

The fundamental reason for the current high foreign exchange reserves lies in China's export-oriented economic development strategy characterized by the so-called low-cost "comparative advantage" for many years. This export-oriented economic development strategy not only leads to a large outflow of resources in China, but also leads to frequent foreign trade frictions due to excessive foreign exchange reserves and trade surplus. For example, the textile trade between China and China has recently attracted much attention.

2. High foreign exchange reserves bring high exchange rate risk.

Since China mainly uses the US dollar as the reserve currency, the change of the US dollar exchange rate will often bring about the change of the value of foreign exchange reserves. According to conservative estimates, 80% of China's foreign exchange reserves are US dollar assets, and the more US dollar foreign exchange reserves China holds, the more it is subject to the United States. Because, once the dollar depreciates, the biggest losers are the China government and investors who hold dollar assets, and the depreciation of the dollar will undoubtedly make these assets seriously shrink. For example, a 2% appreciation of RMB against USD means that the value of USD in China's foreign exchange reserves has shrunk by 2%, which is a very serious problem.

3. At present, the utilization of foreign exchange reserve resources has not reached the optimal allocation, and the benefits are not good.

At present, foreign bond investment and foreign bank deposits are the main forms of short-term capital utilization in China. This kind of foreign exchange reserve management method is inefficient and has not made China's foreign exchange reserve resources get the due benefits. China has very preferential policies.

The cost attracts foreign investment, while China's foreign exchange reserves have only a relatively low return. For example, a large amount of China's foreign exchange reserves are used to buy US Treasury bonds, invest in real estate fund companies supported by the US government or deposit in Bank of America, and the money is transferred to American enterprises to reinvest in China. The rate of return on foreign investment in China has been around 15%, regardless of the losses caused by environmental pollution, while the rate of return on foreign exchange reserves to buy US Treasury bonds is only 5%. We can calculate how big our net loss is these years.

4. The influx of speculative capital and the emergence of a bubble in the economy will easily lead to an economic crisis.

Although the foreign exchange reserves formed by short-term capital inflows are conducive to the development and activity of the real economy and increase the availability and availability of funds, excessive, especially pure speculative capital inflows are easy to lead to "bubble" of the economy, which implies an economic crisis and has high risks. At present, nearly one third of China's foreign exchange reserves are speculative capital in anticipation of RMB appreciation and asset appreciation in other fields, which is more dangerous.

The high foreign exchange reserves show that in the foreign exchange market, the oversupply of foreign exchange will force the local currency to appreciate, which will often reduce the competitiveness of domestic export products and is not conducive to employment and economic growth. High asset value is easy to form asset bubbles. Its formation mechanism is that the expectation of local currency appreciation leads to capital inflow, which promotes the increase of foreign exchange reserves and asset prices, strengthens or realizes the appreciation of local currency, promotes more hot money to enter, and continues to promote the increase of reserves, asset prices and local currency appreciation. When the real economy can't support the profit requirements or the inflow capital is expected to reverse, these inflows will be withdrawn, resulting in a rapid decrease in foreign exchange reserves, shrinking assets and depreciation of the local currency, which will lead to financial crisis and economic collapse. For example, at the end of last century, the Japanese bubble economy triggered a recession of more than ten years, so China should take a warning and deal with it as soon as possible.

5. Excessive foreign exchange reserves will have an impact on China's macro-economy.

In order to offset the rapid growth of the base currency caused by foreign exchange, the central bank began to issue "bills" in 2003 to create its own liabilities, and the interest paid for this was offset by supplying more base currency. However, if this move is repeated, the central bank will fall into a "snowball" dilemma and monetary policy will lose its ability to actively adjust.

In the first half of this year, foreign exchange reserves increased by1010 billion US dollars, and China's corresponding base currency also passively invested more than 800 billion US dollars. If hedging is carried out by issuing central bank bills, not only the cost will increase, but also the effects of monetary policy and interest rate policy will be affected to some extent.

At the same time, increasing the money supply may lead to inflation and reduce the macro-control ability. The increase of foreign exchange reserves is an important channel for money supply. The central bank's purchase of foreign exchange reserves and base money supply often leads to inflation through the currency multiplier effect. Moreover, the two main effects of high foreign exchange reserves are conflicting, which reduces the space and effectiveness of the central bank's monetary policy. For example, in order to reduce the impact of high foreign exchange reserves on China, the central bank must reduce the money supply by withdrawing cash or raising interest rates, thus increasing the pressure of local currency appreciation. On the contrary, in order to reduce the pressure of local currency appreciation caused by high foreign exchange reserves, the central bank must increase the money supply by lowering interest rates, which strengthens the second influence, that is, the conflict between internal and external objectives of the central bank's monetary policy.

Fourth, the treatment plan

At the moment when China's foreign exchange reserves have been formed in large quantities, how to improve the utilization efficiency has become an important issue.

1. Reform the management of foreign exchange, improve the exchange rate formation mechanism and strengthen the role of the market.

The management of foreign exchange reserves should start from four aspects: first, strengthen the management of capital flow during the formation of foreign exchange reserves to avoid the inflow and outflow of large-scale short-term capital (hot money); Second, the adjustment of currency structure of foreign exchange reserves makes the currency structure of reserves diversified; Third, foreign exchange reserves should be used efficiently; The fourth is to speed up the reform of the foreign exchange account management system.

In the reform of RMB exchange rate, the central bank has begun to act:

On July 2 1, the RMB appreciated slightly by 2% against the US dollar, giving up the previous practice of "focusing only on the US dollar" and referring to "a basket of currencies" is a fine-tuning to deal with the excessive growth of foreign exchange reserves. At the beginning of August, the central bank first increased the proportion of foreign exchange retained in the current account of domestic institutions and relaxed the policy of purchasing foreign exchange in the current account of individual residents; Subsequently, qualified non-bank financial institutions and non-financial enterprises are allowed to participate in the inter-bank foreign exchange market transactions, and inquiry transactions are introduced in the foreign exchange market to further enrich the trading varieties in the inter-bank foreign exchange market, expand the forward settlement and sale of foreign exchange business and start swap business, so as to provide customers with hedging tools and manage exchange rate risks for banks and further develop the foreign exchange market. On September 22, the State Administration of Foreign Exchange announced that it would cancel the foreign exchange quota for the turnover position of foreign exchange settlement and sale of designated foreign exchange banks and implement the comprehensive position management of foreign exchange settlement and sale, which provided banks with more foreign exchange holding space and enabled them to manage foreign exchange funds flexibly and independently.

These measures are actually measures to enhance banks' independent pricing ability and risk awareness of foreign exchange management, which is conducive to improving the basic role of the market in finding prices and avoiding risks in exchange rate formation, and is conducive to the central bank's more effective management and adjustment of the RMB exchange rate based on market supply and demand and with reference to the exchange rate changes of a basket of currencies. So as to avoid exchange rate risks and alleviate the situation of excessive foreign exchange reserves.

Keeping the RMB exchange rate stable can also prevent bubbles from forming in other fields, break speculators' expectations and transfer speculative capital to other places, thus eliminating the speculative part of foreign exchange reserves, eliminating hidden dangers and preventing economic bubbles.

2. Control the growth of foreign exchange reserves by adjusting the economic structure and expanding domestic demand.

In the whole formation mechanism of foreign exchange reserves, foreign exchange reserves are only the result of the whole balance of payments, foreign economic and trade exchanges and macroeconomic operation. While promoting the exchange rate reform, the central government must also carry out in-depth reforms from the root causes, solve the imbalance in the macro economy, realize the transformation of growth mode and expand domestic demand.

In order to control the excessive growth of foreign exchange reserves and form a benign situation of international payments, we should gradually improve the technical content and added value of products, improve the industrial structure, and find a new development path. With the economic strategy of "promoting consumption and stimulating domestic demand", we will rely on the increase of domestic total demand to promote sustained economic development, thus reducing the trade surplus and shifting from external demand to an economic growth mode that pays equal attention to both internal and external demand.

3. Optimize investment methods, and long-term foreign investment can be conducted by specialized agencies.

Under the condition that foreign exchange reserves can meet the import trade demand for several months and have the ability to repay foreign debts, we can consider setting up special investment institutions to operate these foreign exchange reserves for long-term investment in order to obtain higher foreign exchange investment income.

For example, the relevant departments in China take measures to encourage the expansion of domestic foreign exchange capital outflow channels: the China government encourages insurance funds, various social funds and more China enterprises to invest abroad, and the US dollar funds raised by China enterprises in overseas stock markets can also be kept in their own accounts without being converted into RMB.

In order to speed up the shareholding system reform and overseas listing of state-owned commercial banks, the State Council injected 45 billion US dollars of foreign exchange reserves into China Bank and China Construction Bank in early 2004, and injected/kloc-0.5 billion US dollars into ICBC in the first half of 2005. This is considered to be one of the ways for the government to effectively use foreign exchange reserves. At present, Huijin has gained good profits by entering all walks of life.

In August this year, SAFE made a regulation to substantially increase the foreign exchange account limit for current account of domestic institutions, and increase the account limit ratio from 30% or 50% to 50% or 80%. This practice is mainly to encourage domestic enterprises to use foreign exchange funds for overseas direct investment. This is also known as one of the countermeasures for the government to make full use of foreign exchange reserves and reduce the pressure of huge reserves.

4. Transform foreign exchange reserve resources into material resources, technology and human resources, and increase the stamina of sustainable development.

China government can consider setting up a "strategic development fund" with the national foreign exchange reserves to promote the long-term economic development of China. First, choose industries that have an important impact on China's sustained economic growth to make strategic overseas investment; The second is to make strategic investment in China's domestic infrastructure, natural resources, education, scientific research and other fields.

As a developing country, especially in the case of obvious polarization, China is in urgent need of funds in all aspects. If the government can invest about 40% of GDP in foreign exchange reserves, such as universal health care, education, social security, environmental protection and other fields, as well as the institutionalized construction of domestic economy and finance, or use it to solve social problems in China and accelerate the development of western provinces in China, it will be of great benefit to improve national welfare and promote economic development.

In overseas investment business, you can invest in strategic industries such as high technology and natural resources in the form of shareholding. For example, a certain proportion of energy, non-ferrous metals, ferrous metals and other physical reserves will be carried out, and foreign industries will be acquired as PetroChina acquired Kazakhstan Oil Company. In addition, in R&; D can also do a lot, like Lenovo's well-known acquisition of IBM's PC business; There is also a recent example: On June 24th, 2005, AMD appointed the technology transferee, Peking University Microprocessor 86 microprocessor core technology, which provided a good reference for China to use foreign exchange reserves to absorb international mainstream and mature core technology providers' R&D centers and transfer their low power consumption X. China should continue to increase investment in these fields, seek better investment methods, make better use of existing foreign exchange resources, and make greater contributions to the sustainable development of social economy.

Conclusion:

For a long time to come, the change of China's foreign exchange reserves will be one of the most important factors affecting the global economy, including China. The risks or harms brought by excessive foreign exchange reserves to China's economic development are worth discussing, but the deep-seated reasons behind the surge in foreign exchange reserves deserve more attention. It is the most direct demand to resolve all kinds of risks and pressures brought by high foreign exchange reserves and reduce the foreign exchange reserves held by China to a more appropriate and balanced level. China's foreign exchange reserves should be reasonably increased and effectively utilized to further promote the rapid and healthy development of China's economy.

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It seems that you don't need a high talent to study economics. Intellectually, compared with some disciplines of philosophy or pure science, is it not easy? This subject looks easy, but few people can get ahead! This incomprehensible phenomenon seems to be that as an outstanding economist, you must have a combination of many talents, which is very valuable. He must be a mathematician, historian, politician and, to some extent, a philosopher. What he must master is to write down what he has to say. He must be good at using his thinking ability to infer individual phenomena from universal principles. In his unrestrained thinking, he should touch on both abstract and concrete aspects. He must study the present and infer the future from the past. He should not completely ignore any aspect of human character and its customs. At the same time, he must maintain an attitude that is neither idle nor impartial. He is as calm and narcissistic as an artist, but sometimes he must be as close to the secular environment as a politician.

John? Maynard Keynes

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An economic joke? The president's confusion

Clinton and Yeltsin chatted intermittently at the summit. Yeltsin said to Clinton, "You know, I have a question. I have a hundred guards, but one of them is a traitor. I can't confirm who it is. " After listening, Clinton said: "This is nothing. What bothers me is that I have a hundred economists, and only one tells the truth, but it is not the same person every time. "

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