China's ** reserves (included in international reserves) were 2018 tons, ranking sixth in the world. But this figure does not fully reflect the true size of China's reserves, as China still has a portion of its reserves purchased through "non-registered" transactions that are not reflected in official statistics, but rather as a hidden reserve.
Since the second half of last year, China has used "non-registered" transactions to hoard a large number of **, and the proportion of hidden reserves in total reserves has also increased. This approach can not only avoid the sensitive reaction of the international market to China's demand, but also enhance China's voice and influence in the global financial system.
The true size of China's ** reserves has always been a mystery. The most conservative estimate is that China has more than 5,000 tonnes of ** reserves, ranking second in the world. But some people believe that China's ** reserves have already exceeded 10,000 tons, far exceeding the United States (official data shows that the ** reserves of the United States are 8,133.).5 tons). Why is China so keen on accumulation?What role does it play in China's economic and financial system?
China is actively increasing its own reserves, which are mainly in two aspects: one is domestic mining (China has maintained the status of the world's largest producer for more than ten consecutive years), and the other is imported. According to statistics, China's ** imports 2-3 times more than domestic production, and these ** will not be exported to other countries. This means that China has the world's largest inflows, and all of them remain domestically. This unique strategy shows that China attaches great importance to the first and the prevention of future financial risks.
One might ask: why is China so aggressively increasing its own ** reserves?
The answer is: ** is a strategic resource and an "emergency currency". In the event of a global crisis, the US dollar may lose credibility due to military and stance, and other reserve currencies (such as the euro, pound, yen, etc.) may also depreciate. At this time, ** will become the only means of payment for China's imports of essential goods. This logic is reasonable.
This is one of the reasons why many countries keep ** reserves. The Jamaican International Conference in 1976 ended the gold standard by declaring that ** was no longer the basis of money, but as an ordinary traded commodity. The U.S. dollar became the core of the international monetary system and enjoyed the hegemony of the U.S. dollar. But what if the dollar collapses in a future world war?Then, ** may become "emergency money" again, taking on the function of currency.
There are many reasons for China's increase in reserves, but one of the most important is to get rid of its overdependence on the dollar. Since 2015, when the renminbi gained reserve currency status with the International Monetary Fund, China has had ambitions to make the renminbi a true international currency and even challenge the dollar's dominance in international finance. In order to achieve this goal, ** is an indispensable tool for China. Not only can it increase the credibility and attractiveness of the yuan, but it can also serve as an offensive one, breaking the world currency throne of the dollar.
Will China implement the best standard?After all, China has such a large ** reserve, far more than those countries that implemented ** standards in the 19th century. There is no unanimous opinion on this.
* The standard is a double-edged sword, it can both make the national currency a world currency and deplete the country's reserves. The meaning of the standard is that the state guarantees that the content of each currency unit remains unchanged, and at the same time promises to exchange the currency at any time. In this way, the national currency can quickly gain the trust and recognition of the international market and become a common medium of exchange in the world. However, if the country has a deficit or domestic demand falls, it will lead to currency outflows and a decrease in reserves. At this time, the country must maintain the ** standard through austerity policy, which will exacerbate the economic crisis.
*The U.S. dollar standard is an international monetary system established by the Bretton Woods Conference in 1944, which stipulates a fixed exchange rate between the U.S. dollar and **, and a fixed exchange rate between other currencies and the U.S. dollar. On the face of it, this system lasted until the 1976 Jamaica Conference, which is 32 years. But in reality, it is only valid for about ten years. Because since the early 1960s, the United States has had its first deficit and deficit since World War II, which led to the over-issuance and outflow of dollars, which shook the foundation of the dollar standard.
In order to make up for the fiscal deficit, the United States constantly prints dollars, which leads to excessive circulation of dollars around the world. Many countries are worried about the depreciation of the US dollar, and have exchanged the US dollars in their hands for ** to protect their wealth. As a result, the United States' ** reserves shrank sharply in the 60s, from more than 20,000 tons at the beginning of the decade to less than 10,000 tons at the end of the decade.
On August 15, 1971, Nixon announced a decision that shocked the world: the exchange of the dollar against ** would be "temporarily suspended". This measure was in response to a sharp decline in US ** reserves, which at that time had fallen to less than 10,000 tons. However, this "temporary" pause became a permanent end, and the fixed exchange rate system between the US dollar and ** was formally abolished at the Jamaica Conference in January 1976, marking the end of the ** dollar standard.
In my opinion, behind China's increase in national reserves, there is a more far-reaching strategic intention. That is, China may want to introduce a renminbi anchored by **, so as to challenge the hegemony of the US dollar in the global foreign exchange market. It is worth noting that China has been at the forefront of the world in the research and development and promotion of the ** bank digital currency (CBDC). If China can successfully combine ** and digital currencies, then the renminbi is expected to become a more attractive and trusted international reserve currency.
I think the purpose of China's increase in reserves is to make the renminbi a world currency. China's ** standard is a transitional strategy to make the renminbi a world currency. This strategy can only be effective if the dollar's status as the world's reserve currency has not been completely destroyed.
I estimate that this situation may only last for about a month. As soon as the dollar collapses, China will immediately (the day after the dollar collapses) stop exchanging yuan for **. At that time, China may use international conferences to promote the implementation of a new monetary system based on the renminbi. Similar to the 1976 Jamaica Conference, China will need to enlist the support of other countries to make the renminbi the new world currency standard. Of course, this is only the ideal situation.
After the collapse of the dollar, the influence of the Western bloc will decline significantly, but it is still possible to resist changes in China's monetary and financial spheres out of inertia or interest.
The true scale of China's increase in reserves has been a mystery. Many people wonder why China is hiding this
China's ** reserves may well exceed the official 2018 tons. Some estimate that China's ** reserves could reach 10,000 tons. However, China cannot make such a large number public. At least not yet. Doing so will have a detrimental effect on the RMB and ***. The renminbi may appreciate excessively, affecting export competitiveness. ** May skyrocket, triggering market turmoil. Official foreign exchange reserves in the US dollar (3.)$2 trillion) will also depreciate sharply as a result.
China's secrecy of its reserves is based on strategic considerations. China does not want the world to know its ** strength, so as not to attract unnecessary attention and interference. At the same time, China does not want its currency to appreciate excessively because of ** support, which will hurt its export competitiveness. However, with the development of China's economy and the improvement of its international status, China's ** reserves will sooner or later become an open secret. At that time, China will face the challenge of how to rationally use its best resources to safeguard its financial security and national interests.
China has a trump card that can tarnish the dollar, and that is **. If China, like the United States, uses its currency as a currency, it will only need to publish its huge reserves, or partially peg the renminbi with it. Previously, it was rumored that China's ** bank digital currency (CBDC) would be partially supported by **. Once this happens, unsecured currencies in the West will face tremendous depreciation pressure. Even if Western banknotes take some supportive measures, they will soar to tens of thousands of dollars.
China has been accumulating ** for 20 years, and whoever has ** will make the rules.