Opening up, then how much domestic currency a country issues to offset foreign exchange is determined by the market (interest rate and trading volume). However, since China basically has official control over the foreign exchange market and the foreign exchange transaction volume is very small, there is no official determination on the currency that must be issued for write-offs. Once domestic manufacturers earn more dollars from abroad because of their active foreign trade, they will change them into RMB when they return home. At this time, the central bank had to increase the base money supply. At the same time, because the market is not open, there are many restrictions for domestic residents to exchange RMB for US dollars to invest and buy things abroad. This drawback is that there are more and more dollars, and at the same time, more and more RMB is used for hedging. If the central bank issues a "central bank bill" with deferred payment, the domestic currency will be enough to reach inflation.

There is no simple distinction between good and bad foreign trade surplus, so it does not need to be qualitative. The expansion of the surplus shows that you have strong export ability, but it also shows that you rarely import. This situation needs specific analysis. China has a strong ability to export low-end products, but it may not necessarily lead to such a large trade surplus. In many cases, domestic residents want to be restricted from investing abroad, but we are also restricted from buying from other countries. Japan is different. People's export ability is really strong. Even with such an open market, they can accumulate so many foreign exchange reserves.