Zhang Monan: China'S Foreign Reserves Reform Needs Deeper Analysis

(Zhang Monan, Associate Research Fellow, Department of economic forecasting, National Information Center)

The State Administration of Foreign Affairs said on the 5 day that it will deepen the reform of foreign reserves management this year.

How to achieve deeper problems and how to make foreign reserves play a more important role in the process of becoming stronger? China is looking for new answers.

With China's economy "

However, unlike the nature of other developed creditor countries, the nature of creditor's rights in China is a typical official creditor country.

At the end of 9 2011, China's foreign financial assets amounted to 46653 billion US dollars, of which reserve assets amounted to 32779 billion US dollars, accounting for 70% of foreign financial assets. Foreign exchange assets were concentrated in the hands of the government.

From the international comparison, although the official foreign exchange reserves of the United States are only 1/5 in China, the value of foreign exchange held by the United States is 9 trillion dollars.

On the other hand, the central bank also faces "Impossible Triangle paradox".

With the increasing number of channels for capital cross-border flows, higher interest rates will attract larger inflows of international speculative capital for arbitrage, arbitrage or arbitrage, which in turn will increase the write off pressure.

That is to say, with the continuous increase of the degree of freedom of international capital flow, we are bound to bypass the "Impossible Triangle dilemma" and try to stabilize the exchange rate, and the autonomy of monetary policy is seriously challenged.

From this level, Japan's experience of exporting and surplus countries is worth learning: with the promotion of yen appreciation and industrial pfer, in 2005, the strategy of "trade based nation" strategy to "invest in the country" was put forward in 2005 to improve the structure of external investment and improve the structure and quality of international investment. It also proposed to double the ratio of surplus to GDP by 2030.

In recent 5 years, the interest income of overseas securities in Japan is over 50 billion US dollars each year. The capital gains and overseas entry of Japanese enterprises are extremely large, and the income income and expenditure surplus has become an important source of external storage in Japan.

It can be seen that the distinction between official reserve and Private Reserve is the key to determining the structure of foreign reserves.

For China, how to change the structure of official reserves and private reserves, and truly realize the pformation from "relocating to the country" to "relocating people to the people" is of great significance.

In the study of foreign storage structure, we need to pay attention to four major relationships, namely, the ratio between official reserves and private reserves; the ratio between us dollar reserves and non US currency reserves; the ratio of assets with high liquidity to assets; and the ratio of reserve assets to Bank of America and dispersed banks in other countries.

The four proportions can be summarized as four principles: security, authenticity, liquidity and profitability.

Of the four proportions, the first is the ratio between official reserves and private reserves.

The focus of the reserve is on the simplicity of the people not only in "storing money in the people" but also in reflecting whether the wealth level, reserve level and exchange rate level of a country are real.

Under the modern market economy condition, the pricing power of the currency does not depend on the government any more. Only when the private reserves are larger than the official foreign exchange reserves, the country is really prosperous and powerful. When enterprises and ordinary people dare to hold foreign exchange assets, it shows that they have more confidence in their currencies, and the exchange rate of this country is real.

China needs to start a new round