1. As for the currency of trade settlement: Generally speaking, the payment currency in a trade contract is agreed by both parties through consultation, which can be the currency of the exporting country and the importing country, or the currency of a third country. In China's foreign trade, because RMB is not a freely convertible currency, it is generally denominated in a freely convertible foreign currency, and it is denominated in euros on the same day as the European Union and the Japanese yen. It can also be a currency with a relatively large international settlement, such as the US dollar.

2. Channels of foreign exchange reserves: exporters sell foreign exchange (drafts, etc.). ) from the Bank of China (or other foreign exchange banks, the same below), and the importer goes to the foreign exchange bank to buy the required foreign exchange. If exports exceed imports, foreign exchange banks will generate foreign exchange surpluses (foreign exchange banks provide a certain amount of foreign exchange for foreign exchange business, but this is not a national foreign exchange reserve). In order to reduce the risk of holding too much foreign exchange, the surplus foreign exchange is sold to the state (central bank) to form foreign exchange reserves. Because of the purchase and sale of payment instruments such as bills of exchange, foreign exchange reserves are actually the deposits of the central bank in the banks of foreign exchange currency issuing countries (or the purchase of national debts of foreign exchange currency issuing countries, etc.). ), that is, the state's creditor's rights to the foreign exchange currency issuing country or overseas assets. The increase of foreign exchange reserves has resulted in the increase of foreign assets.

The same is true if it is a capital project. Foreign direct investment in China, the use of foreign exchange to buy RMB, and then use RMB to set up industries in China. Commercial banks sell the oversubscribed foreign exchange to the state (central bank), which constitutes the national foreign exchange reserve. If foreign countries directly buy equipment from abroad and transport it to China for investment, it is China's equipment import. Of course, it will not form foreign exchange reserves. So will other investments.

3. If RMB is a freely convertible currency, China uses RMB for its exports to the United States, but American importers do not have RMB, so they need to buy RMB from American foreign exchange banks, which deposit RMB in a foreign exchange bank in China, which shows that the amount of RMB in American banks in China has decreased. The bank needs to buy RMB from China Foreign Exchange Bank in US dollars (or other foreign currencies) to ensure the smooth development of its RMB trading business. China Foreign Exchange Bank obtained US dollars, sold RMB, and then sold US dollars to the People's Bank of China (China Central Bank) to obtain RMB, which eventually led to the increase of China's foreign exchange reserves.

4. Current account includes commodity trading/labor trading/investment income/free transfer (such as aid and compensation, etc.). ).

5. Because the US dollar is an international currency, the deficit of the United States and the increase in US dollar payments have led to an increase in the amount of US dollars in other exporting countries (the amount of US dollars in the international market has increased). Supply exceeds demand and naturally depreciates, so does China's surplus. China obtained a large amount of foreign exchange, which increased the supply of foreign exchange, devalued the foreign exchange and appreciated the local currency.