Chapter 72 17. Winning the lottery: 2.087 billion euros or more

China has the largest foreign exchange reserves in the world!This growth has come in leaps and bounds.As of the end of 2010, China's foreign exchange reserves were 2.087 trillion euros, far surpassing other countries and ranking first in the world.Over the course of four years, foreign exchange reserves have grown rapidly.If Hong Kong's foreign exchange reserves of nearly 2000 trillion euros are included, then China's foreign exchange reserves of nearly 2.3 trillion euros account for 30% of the world's foreign exchange reserves! December 2010: €2.087 trillion December 2009: €1.755 trillion

January 2008: €1.16389 trillion March 2007: €0.878 trillion April 2006: €0.64 trillion China has huge foreign exchange reserves, and it has to deal with the challenges of reserve management: the diversification of foreign exchange, the profitability of US currency and the profitability of low interest rate US treasury bills... In the confrontation between China and the United States, if the U.S. government mentions "yuan", the Chinese government will consider its foreign exchange reserves (mainly U.S. dollars, but also some other currencies: euro, yen, etc.) for financial security.

By some estimates, more than half or one-third of Chinese assets are registered in US dollars... In other words, if the Obama-Hu Jintao current dialogue seeks to agree, China, which sells goods, is unwilling to be paid in a devalued currency. Foreign currency reserves, monetary cash, and state-owned capital reserves (gold, foreign exchange reserves, treasury bonds, foreign bonds, etc.) are owned by the country's central bank, which uses them for: formulating and enforcing exchange rates Contribution to pay trade balance Provides the economy with the currency necessary for international transactions (property, services, money, etc.)

Participate in domestic investment and formulate national international strategies The Bretton Woods agreement (July 22, 1944) established the basis for a new international monetary system, including the adoption of a stable and adjustable exchange system, in order to achieve the goal of stable currency. Today, the logic is different from that of the Bretton Woods agreement, and the monetary system is no longer organized in the same way.That fixed currency exchange system was abolished in 1971, when former US President Richard Nixon decided to stop foreign exchanges of dollars for gold in the US.

From the later period of the establishment of this new system and the end of dollar dominance in 1971, another upheaval was the rise of international capital.We are involved in the globalization of capital.The establishment of a large capital market on a global scale should serve to promote the growth of the global economy.All this is going on quietly, and huge amounts of funds are circulating quietly and without fixed rules. The reality is less glamorous, because with a global free and unregulated market system comes instability as we know it.For this reason, currency reserves have become both a manifestation of power and national strength for the state, but also a criticism: the state uses it as an excuse to justify "difficulties in management" and their current "response to international financial forms".

Asian foreign exchange reserves have grown rapidly. Since 2006, China's foreign exchange reserves have ranked first in the world.The main countries and regions holding foreign exchange reserves are China, Japan, Russia, Saudi Arabia, Taiwan, India, South Korea, Hong Kong, Brazil and Singapore. Percentage of Foreign Exchange Reserves by Countries (Regions) in the World in 2009 China 30% Russia 5.7% Japan 13.9% Saudi Arabia 5.1% Taiwan, China 4.4% India 3.4% South Korea 3.3% Brazil 3.1% Hong Kong, China 3.2% and above, a total of 17.7% Singapore 2.5% EU and other countries 25% The total share of Asian countries is 57.3%, and the total is 100%.

Thus, Asia dominates nearly 60% of the world's foreign exchange.We found that this field was directly influenced by China in this era, plus China Taiwan, China Hong Kong and Singapore, according to the announcement, have 40.1% of the world's foreign exchange reserves. What shook the market?For example, a report in the Financial Times published in 2010 stated that China would reconsider investing in foreign bonds in the euro zone, a news that was immediately denied by the Chinese central bank. China's rapidly growing foreign exchange reserves are no longer just a symbol of super economic strength, how to manage and control these foreign exchange reserves is also a difficult problem.

China should diversify its foreign exchange reserves and reduce its investment in US treasuries.That's why China is also investing in the eurozone and elsewhere.The most used and dominant foreign currencies are the US dollar (60%), the euro (30%), followed by the Japanese yen, British pound and Swiss franc. This rapid foreign exchange growth is due to China's trade surplus, the development of direct overseas investment, the income from overseas investment and the return of overseas capital.Since 1994, China's foreign exchange reserves have increased 54 times. Against a backdrop of excess circulation, dollar depreciation, growing US debt, low US Treasury yields and inflation and appreciation of the renminbi, China is struggling to manage its foreign exchange reserves.According to Chinese sources, there is a growing perception that such endless foreign exchange growth isn't always a good thing if China encourages exports in the long run to expand its foreign exchange reserves.

China's financial industry is in the stage of development, and China's currency has promoted the internationalization of the financial industry.China's financial market is not yet perfect.To this end, China will improve the investment mechanism, improve and standardize the financial market and adjust the domestic capital structure. The main goal is to enable social redistribution to enrich the people and maintain China's stability as a creditor country. Many estimates show that from now to 2035, the world's foreign exchange reserves will increase by at least 9 times, and China alone will contribute 70% of this figure.