China Daily

(Reporter Wu Min) yesterday, the State Administration of Foreign Exchange allocation of hot issues of external storage to answer. SAFE said the outside storage is different from the financial capital, can not be free to use, such as free distribution and use, will lead to inflationary pressures. At the same time China does not pursue a large-scale foreign exchange reserves, while encouraging private holding and investment exchange, to achieve "Tibet Meeting the people."

free use will lead to inflationary pressures

According to SAFE introduction, enterprises and individuals through commercial banks buying and selling foreign currency, such as commercial banks net buying of foreign exchange in inter-bank market to sell to buy after the formation by the central bank as reserves. When the central bank to buy foreign exchange to pay to the holders of the corresponding foreign currency RMB. For example, enterprises selling goods to foreign customers or to accept foreign investment, access to the other party to pay the foreign exchange to commercial banks after the foreign exchange into RMB for domestic use. Settlement process, the companies will sell foreign exchange commercial banks, according to the exchange rate were RMB funds into foreign exchange assets of RMB assets. Individuals will receive the yuan foreign exchange sold to the banks of the process is similar.

commercial banks purchase foreign exchange from enterprises and individuals, the need for foreign exchange allocation of assets and liabilities, will most of the foreign exchange sold in the open window, then businesses and individuals, and after the sale netting foreign exchange to sell excess to the central bank, the central bank to pay the corresponding access to foreign currency Renminbi, the formation of the country's foreign exchange reserves.

SAFE noted that the formation of foreign exchange reserves, companies, individuals, banks are not free to the state of foreign exchange, but was sold to the national equivalent of the yuan, which is significantly different tax and financial income . The central bank for foreign exchange is a cost, and therefore can not be free distribution and use. Such as free distribution and use will affect the people of the balance of bank balance sheets, and inflationary pressures affecting the economic and financial stability. Second, the foreign exchange reserve in the form is mainly used for external payments, such as is necessary for the domestic foreign exchange into RMB second, again to increase money supply, increasing domestic problem of excess liquidity.

external storage is not the better

Administration of Foreign Exchange said yesterday, external storage is not possible, not the pursuit of large-scale foreign exchange reserves in China, nor the pursuit of balance of payments long-term trade surplus, China's current account and capital account surpluses for many years, the increase in foreign exchange reserves, balance of payments is the "twin surplus" in the objective results, reflecting the long-term stability of China's economic growth. China is a large developing country, and even by the traditional indicators of appropriate scale to measure, but also the need to maintain a certain amount of outside storage. External storage is also a sufficient guarantee of confidence. The financial crisis proved sufficient foreign savings to enhance the ability of our response to the crisis.

data show that, as of late 2009, China's external financial assets of 3.46 trillion U.S. dollars, much lower than Europe and the United States and other countries.

to encourage businesses and people who exchange

outside the store for the issue, SAFE admits that most of the current foreign currency assets was mainly concentrated in the hands of the Government, private foreign exchange reservoir is limited. The official foreign reserve of the total external assets of the 2 / 3, while the ratio in Japan is only about 1 / 6. Therefore encourage companies and people to hold and invest in foreign exchange, currency diversification of wealth, to achieve "Tibet Meeting the people." But this requires a process, such as providing more foreign exchange investment channels.

SAFE believes that with the national economic development, increase income, asset allocation diversification of enterprises and the needs of the people will certainly growing, more foreign investment channels and products, We should also make people feel able to hold foreign exchange revenue, then, will greatly ease the pressure on foreign exchange focused on the country.

addition SAFE noted that foreign exchange reserves to improve information transparency must be cautious, steady, can not be hurried. China's foreign exchange reserves, large, play a vital role in the international financial markets, disclosure of the specific investment situation, may lead to market volatility may also affect the effective implementation of our investment activities.

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's foreign currency reserve is a decentralized structure, composition

's foreign reserve in U.S. dollars, euro, yen and other major currencies, there are emerging market currencies, is the combination of a decentralized monetary structure. Dynamic adjustment of the currency structure is to consider the market capacity, liquidity, currency risk return characteristics and elements of the development trend and based on economic, market trends and investment needs for continuous optimization.

International Monetary Fund (IMF) report released this week, global central banks have cut a quarter of the euro and dollar reserves. Euro in the "Configuration" in the fourth quarter of last year the proportion of 27.3% to 27.19%, the dollar accounted for 61.54%, slightly lower than the 62.14 percent last quarter.

3 at the end of the balance of 443.2 billion U.S. dollars foreign debt

(Reporter Wu Min) Administration of Foreign Exchange announced yesterday the first quarter of the basic situation of China's external debt as at end of year three, China's Foreign Debt 443.236 billion U.S. dollars (not including Hong Kong, Macao and Taiwan), which registered a balance of 276.436 billion U.S. dollars foreign debt, trade credit balance of 166.8 billion U.S. dollars.

large proportion of external debt in the short-term external debt. Long-term external debt (by residual maturity) stood at 167.034 billion U.S. dollars, accounting for 37.69%, short-term debt 276.202 billion U.S. dollars, accounting for 62.32%. SAFE previous data show that as at the end of 2009, China's short-term foreign debt balance was 259.259 billion U.S. dollars, accounting for 60.48%, while the first quarter of this year rose to 62.32 percent, which is short-term debt for the fourth consecutive quarter of gains.

according to the experience of recent years, more foreign capital inflows for the quarter, accounting for short-term debt are rising.

Academy of Social Sciences of China's economic assessment of the financial director of the Center by the high reserve, said the increase might be short-term debt accounting for heating and hot money from trading activities into the two areas. Situation from the first quarter, accounting for the rise in short-term foreign debt and cross-border capital flows, the relationship between the larger, but the latest quarter's situation may change in the second quarter, trading activity will heat up.

from the debtor types, registration of foreign debt in sovereign debt borrowed by the State Council ministries and commissions balance of 38.4 billion U.S. dollars, accounting for 13.9%, Chinese-funded financial institutions in the debt balance of 98.655 billion U.S. dollars, accounting for 35.69%, foreign investment corporate debt balance of 94.015 billion U.S. dollars, accounting for 34.01%.

from the currency structure, the dollar-denominated debt accounted for 70% over the previous year increased 2.24 percentage points; yen debt accounted for 11.04%, over the previous year fell 0.85 percentage points; euro debt accounted for 5.49%, compared with the previous end down 0.89 percent; other debt, including special drawing rights, HK, etc., together accounting for 13.47%, over the previous year declined 0.5 percentage points.

The SAFE also announced a new 1-3 month long-term foreign debt borrowed. The first quarter of our new long-term debt borrowed 8.151 billion U.S. dollars, an increase of 4.347 billion U.S. dollars.