Now the country has reduced its holdings of US Treasury bonds for two consecutive months.
What should I do? Of course, I don't care about Greece and many countries in the European Union. People don't know what to do with China.
Besides, IFM, IFM and IFM will become more and more important if they don't talk.
Besides, China can't make all his friends. He is my brother.
It is helpful for you to chat with your friends in this way.
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The demand for RMB appreciation is real. But in order to stimulate exports, the government has been keeping the exchange rate artificially low. According to economists' speculation, the reasonable valuation of RMB against the US dollar is around 5: 1. But if this ratio is reached quickly, China manufacturing will have no price advantage in the world. Exports will drop sharply and economic development will stagnate. This is why China has been afraid to fully open its foreign exchange market.
The direct consequence of China's selling dollars or US Treasury bonds is the economic collapse and even war in China.
Buy dollars, mainly to help please the United States, reduce the pressure of the American government on the China government. Kill two birds with one stone. Throwing out RMB and buying dollars could have eased the pressure of RMB appreciation. China has gained too much advantage in trade with the United States. The reaction of the United States is normal. The U.S. government sanctioned tire enterprises and steel enterprises, but the China government could only verbally protest, without taking substantive resistance. Because I do have a problem.
The failure to start domestic demand is an important reason why China enterprises rely heavily on foreign markets. However, relying on export to stimulate development has caused a huge trade surplus, which has brought appreciation expectations to the domestic currency, and also caused hostility from foreign governments because of the great blow to foreign enterprises.
In the future, if civil strife leads to RMB depreciation, the government can adjust the exchange rate by throwing dollars to redeem RMB. So as long as the government holds a huge amount of dollars, it is not worried about this problem at all. Holding gold cannot achieve the purpose of pleasing the United States and ensuring its own interests. At present, the dollar price is the most closely related to the trend of commodity prices, not the gold price. The dollar is a harder hard currency than gold.
No matter economic collapse, cold war or hot war, any government can't afford it. At present, Sino-US relations are good, and the United States has caused so much trouble to China politically. If the situation worsens, it is unthinkable.
Being sanctioned by the international community will have very serious consequences, and all foreign trade will stagnate. In the late 1990s, Iraq starved while guarding the world's largest oil field, which is proof. The oil produced can only be exchanged for food and medicine necessary for life, and other countries are prohibited from trading with it. Imagine if foreign-funded enterprises in China withdraw and import and export stagnate, what will China have left?