Text|Summer Flower Finance.
This article was first published by Xiahua Finance Headlines.
Recently, China's foreign exchange reserves have increased significantly, adding $70.6 billion, or 500 billion yuan, in just one month, according to the latest released figures.
In contrast, the U.S. has been cracking down on other currencies for the past three months, resulting in three consecutive months of declines in China's foreign reserves, while those in the United States have been in the red**.
But in November, the situation reversed, with China's foreign reserves starting to pick up and the US starting to decline.
This increase in China's foreign reserves will play an important role in stabilizing the renminbi exchange rate, improving China's position in the international community, and promoting China's economic growth.
A large amount of foreign reserves can increase China's intervention in the foreign exchange market, help to restrain the short-term fluctuations of the RMB exchange rate, and at the same time, the huge foreign reserves also prove that China's economic strength has improved, which will certainly enhance China's influence and voice in international affairs.
In addition, the increase in external reserves means that China has more funds in its hands to invest in areas such as infrastructure, education and health care, and it also provides support for Chinese companies to "go global", which will promote China's economic development.
In contrast, the United States is currently facing the twin pressures of inflation and a debt crisis.
High domestic inflation has forced the Federal Reserve to raise interest rates, and the sell-off of US bonds in several countries has also increased the pressure on the US economy. This makes the U.S. dollar untenable, and the U.S. position as the dominant global economy is challenged.
Given the uncertainty surrounding the outlook for the U.S. economy, China has adopted a strategy of buying U.S. bonds instead of U.S. bonds, in order to reduce risk and seek investment diversification.
Compared to U.S. Treasuries,** it is less risky because it depends primarily on market supply and demand rather than a single country's policy. At the same time, as a safe-haven asset, it is also conducive to maintaining value in times of global economic turmoil.
In addition, in the context of escalating friction between China and the United States, reducing economic dependence on the United States has also become a consideration for China.
It can be seen that in this process, **, as a currency that does not depend on any country and has a relatively low risk, is regaining the favor of the market and**.
This trend also reflects the fact that the international monetary system, which has been dominated by the US dollar for a long time, is moving towards multipolarity. Economies such as China seeking to diversify their external reserves will boost the role of other currencies such as the renminbi and the euro in the global economy.
In summary, the current balance of economic power between China and the United States is changing.
Against the backdrop of the challenges facing the US economy, China's foreign reserves have increased significantly, which has strengthened China's ability to respond to international financial risks, and has also enabled China to occupy a more important position in influencing future global economic governance.
While challenges remain, this changing trend heralds China's move to the world stage.
References:Page News: Foreign exchange reserves increased by $70.6 billion month-on-month in November, a 10-year high.
China Economic Net: The pressure on cross-border capital outflows has eased significantly, and the month-on-month rebound of foreign reserves in November exceeded expectations.
China**.com: As of the end of November, the scale of foreign exchange reserves increased by 70.6 billion US dollars month-on-month Expert: There is a foundation to continue to maintain basic stability.