According to data released by the People's Bank of China recently, as of the end of 2009, the balance of the state's foreign exchange reserves was US$2,399.2 billion, a year-on-year increase of 23.28%. In 2009, the national foreign exchange reserves increased by 453.1 billion US dollars, an increase of 35.3 billion US dollars.
"In terms of quantity, the data in the fourth quarter is in line with expectations, and it is also consistent with China's macroeconomic trend." Chen Bingcai, deputy director of the Advisory Department of the National School of Administration, said.
The foreign trade data released at the same time is also confirmed by the foreign exchange reserve data. Foreign capital utilized in the fourth quarter of 2009 was US$7.1 billion, US$7 billion, and US$12.1 billion, of which foreign investment in December increased by 103% year-on-year. Experts believe that the use of foreign capital has increased significantly, indicating that there is a reasonable basis for the growth of foreign exchange reserves. In addition, China's exports in December 2009 increased by 18% over the same period of the previous year, and these gains will be reflected to a certain extent in the increase in foreign exchange reserves.
According to the data, China’s average foreign exchange reserves in the fourth quarter of 2009 were 42.2 billion U.S. dollars. Experts generally believe that it is a reasonable growth. However, the monthly data gap is large, with the increase of foreign exchange reserves in the month of December only increased by 10.4 billion US dollars. Zhao Qingming, a foreign exchange expert at China Construction Bank, believes that the increase in foreign reserves in December may be affected by exchange gains and losses and foreign reserve funds for investment.
According to the data of the State Administration of Foreign Exchange, since the resumption of the QDII (domestic qualified institutional investors) quota in October 2009, various financial institutions have been approved for more than 9 billion US dollars. Although these funds need to be traded in foreign exchange trading centers, it is not equivalent to a direct reduction in foreign exchange reserves, but it will eventually be reflected in changes in foreign exchange reserves.
From the perspective of foreign exchange, the monthly data for the fourth quarter of 2009 were 228.6 billion yuan, 254.3 billion yuan, and 291 billion yuan. Chen Bingcai believes that foreign exchange is relatively average, but it is reflected in the increase in foreign exchange reserves. The foreign exchange account may be diverted in addition to the reserve assets, such as supporting enterprises to go out and inject capital into some financial institutions. Foreign exchange reserve operations profit and loss, etc.
Foreign exchange is the national currency that banks use to purchase foreign exchange reserve assets. Generally speaking, factors such as trade surplus, the amount of foreign capital utilized and the expectation of RMB appreciation are directly reflected in the changes in foreign exchange holdings.
Zhao Qingming said that under the system of foreign exchange settlement and sales, the abundant liquidity is directly related to the currency formed by the central bank's passive placement of foreign exchange, which is reflected in the increase in reserves in foreign exchange reserves.
According to the central bank's data, at the end of December 2009, the broad money supply (M2) balance was 60.62 trillion yuan, up 27.68% year-on-year; the narrow money supply (M1) balance was 22 trillion yuan, up 32.35% year-on-year.
In the opposite direction, in order to control market liquidity, the central bank has realized a net withdrawal of funds of about 240 billion yuan since 2010. So far, it has been withdrawing funds from the open market for 14 consecutive weeks. In addition, on January 12, 2010, the central bank decided to raise the deposit reserve of RMB by 0.5 percentage points. The withdrawal of funds and the tightening of monetary policy indicate that the liquidity in the market is very abundant.
Experts believe that the increase in foreign exchange reserves has also increased the pressure on the appreciation of the renminbi to some extent. In order to stabilize the exchange rate, the central bank needs to absorb foreign exchange, which leads to an increase in the liquidity of the banking system, which in turn leads to an increase in credit and investment, and even an increase in inflationary pressures. In order to control inflation, the central bank has to withdraw money, and it will be written off by issuing central bank bills and raising the statutory reserve ratio. The increase in the central bank bill will lead to an increase in interest rates, which will narrow the spread with foreign countries and lead to the inflow of “hot moneyâ€.
Zhao Qingming pointed out that in 2007 and the first half of 2008, China has experienced such a situation in the case of excess liquidity, and it is also necessary to be vigilant. "The slowdown in the growth of foreign exchange reserves in December does not indicate that the inflow of hot money has slowed down. At present, the domestic and international economic environment does not support this possibility." Zhao Qingming said.
"In terms of quantity, the data in the fourth quarter is in line with expectations, and it is also consistent with China's macroeconomic trend." Chen Bingcai, deputy director of the Advisory Department of the National School of Administration, said.
The foreign trade data released at the same time is also confirmed by the foreign exchange reserve data. Foreign capital utilized in the fourth quarter of 2009 was US$7.1 billion, US$7 billion, and US$12.1 billion, of which foreign investment in December increased by 103% year-on-year. Experts believe that the use of foreign capital has increased significantly, indicating that there is a reasonable basis for the growth of foreign exchange reserves. In addition, China's exports in December 2009 increased by 18% over the same period of the previous year, and these gains will be reflected to a certain extent in the increase in foreign exchange reserves.
According to the data, China’s average foreign exchange reserves in the fourth quarter of 2009 were 42.2 billion U.S. dollars. Experts generally believe that it is a reasonable growth. However, the monthly data gap is large, with the increase of foreign exchange reserves in the month of December only increased by 10.4 billion US dollars. Zhao Qingming, a foreign exchange expert at China Construction Bank, believes that the increase in foreign reserves in December may be affected by exchange gains and losses and foreign reserve funds for investment.
According to the data of the State Administration of Foreign Exchange, since the resumption of the QDII (domestic qualified institutional investors) quota in October 2009, various financial institutions have been approved for more than 9 billion US dollars. Although these funds need to be traded in foreign exchange trading centers, it is not equivalent to a direct reduction in foreign exchange reserves, but it will eventually be reflected in changes in foreign exchange reserves.
From the perspective of foreign exchange, the monthly data for the fourth quarter of 2009 were 228.6 billion yuan, 254.3 billion yuan, and 291 billion yuan. Chen Bingcai believes that foreign exchange is relatively average, but it is reflected in the increase in foreign exchange reserves. The foreign exchange account may be diverted in addition to the reserve assets, such as supporting enterprises to go out and inject capital into some financial institutions. Foreign exchange reserve operations profit and loss, etc.
Foreign exchange is the national currency that banks use to purchase foreign exchange reserve assets. Generally speaking, factors such as trade surplus, the amount of foreign capital utilized and the expectation of RMB appreciation are directly reflected in the changes in foreign exchange holdings.
Zhao Qingming said that under the system of foreign exchange settlement and sales, the abundant liquidity is directly related to the currency formed by the central bank's passive placement of foreign exchange, which is reflected in the increase in reserves in foreign exchange reserves.
According to the central bank's data, at the end of December 2009, the broad money supply (M2) balance was 60.62 trillion yuan, up 27.68% year-on-year; the narrow money supply (M1) balance was 22 trillion yuan, up 32.35% year-on-year.
In the opposite direction, in order to control market liquidity, the central bank has realized a net withdrawal of funds of about 240 billion yuan since 2010. So far, it has been withdrawing funds from the open market for 14 consecutive weeks. In addition, on January 12, 2010, the central bank decided to raise the deposit reserve of RMB by 0.5 percentage points. The withdrawal of funds and the tightening of monetary policy indicate that the liquidity in the market is very abundant.
Experts believe that the increase in foreign exchange reserves has also increased the pressure on the appreciation of the renminbi to some extent. In order to stabilize the exchange rate, the central bank needs to absorb foreign exchange, which leads to an increase in the liquidity of the banking system, which in turn leads to an increase in credit and investment, and even an increase in inflationary pressures. In order to control inflation, the central bank has to withdraw money, and it will be written off by issuing central bank bills and raising the statutory reserve ratio. The increase in the central bank bill will lead to an increase in interest rates, which will narrow the spread with foreign countries and lead to the inflow of “hot moneyâ€.
Zhao Qingming pointed out that in 2007 and the first half of 2008, China has experienced such a situation in the case of excess liquidity, and it is also necessary to be vigilant. "The slowdown in the growth of foreign exchange reserves in December does not indicate that the inflow of hot money has slowed down. At present, the domestic and international economic environment does not support this possibility." Zhao Qingming said.
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