1. Double surplus of current account, capital account and financial account.
Since 1994, China's balance of payments has always maintained a "double surplus" trend, although the current account and the capital and financial account have changed greatly every year, especially the total surplus of the two accounts is relatively high, reaching 223.76 billion US dollars 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 unification of exchange rate has stimulated the rapid growth of exports and kept China's international trade in surplus. Second, China's advantages in labor resources and market potential, as well as China's various super-national treatments for foreign investment in tax collection, industrial policies and market access. As a result, foreign direct investment in China continued to grow, while China enterprises did not "go global", resulting in capital inflows exceeding outflows, and the financial and capital account surpluses widened.
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 in addition to allowing some foreign-invested enterprises to open foreign exchange cash accounts, the foreign exchange in the hands of enterprises and individuals must be sold to designated foreign exchange banks, which must sell foreign exchange beyond the quota approved by the State Administration of Foreign Exchange in the market. As a receiver in the market, the central bank generally accumulates the country's foreign exchange reserves by buying foreign exchange, which leads to its rapid growth. In 2005 and 2006, with the reform of China's compulsory foreign exchange settlement and sale system to willing foreign exchange settlement and sale system, the influence of foreign exchange settlement and sale system on China's foreign exchange reserves gradually eased, but it was 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 reform, the exchange rate system was pegged to the US dollar, and the RMB was pegged to the US dollar, so the allowed exchange rate fluctuations were extremely limited. After the exchange rate reform in July 2005, it adopted the strategy of pegged to a basket of currencies instead of pegged to the US dollar, and then appreciated by 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 has become the final market liquidator in the foreign exchange market. In the case that the supply of US dollars exceeds the demand, the central bank is forced to attract US dollars brought by the growth of foreign trade and foreign capital in the market, so as to maintain the balance between supply and demand in the foreign exchange market, resulting in 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; Because it can stabilize the expected investment income, promote the influx of foreign capital and increase the capital account surplus.
4. Expectation of RMB appreciation
Since February 2002, 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 and devalued other currencies, which led to the currency being undervalued and the pressure of RMB appreciation increasing, which eventually led to the RMB exchange rate reform in July 2005. 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 expectation of RMB appreciation in the market has gradually increased. The expectation of appreciation stimulated the international capital to flow to China.