Over the past few months, the U.S. has struggled to suppress the exchange rate of non-U.S. currencies, resulting in China's foreign exchange reserves for three consecutive months**. However, the latest data shows that China's foreign exchange reserves increased by US$70.6 billion, equivalent to 500 billion yuan, in just one month. This growth rate came as a surprise to the United States and indicates that China's foreign exchange reserves continue to expand.
The magnitude of the increase in China's external reserves is remarkable, but more importantly, the composition of the increased external reserves has changed dramatically. In the past, China's external reserves increased mainly through the purchase of US dollar assets, and then the purchase of US bonds on a large scale. At the peak of China's foreign reserves, the holdings of U.S. bonds were close to 1$4 trillion. Today, however, the situation is different, as China continues to sell US bonds even as its foreign exchange reserves increase. Our holdings of U.S. debt have now fallen to $780 billion, nearly $600 billion from our peak. In recent years, we have continued to refresh the scale of U.S. bonds, which shows that our determination is becoming more and more firm. This situation is difficult for the United States to reassure because they are no longer able to sell us more US debt.
In addition, it is likely that the assets increased by China's foreign reserves will not be the US dollar, but other foreign currency assets. The dollar's share of global foreign exchange reserves is declining, falling by nearly 20 percentage points over the past 20 years. This shows that for global central banks, the importance of other currencies relative to the US dollar is increasingly valued. Although the SWIFT data shows that the US dollar still accounts for the largest share of global payments, and is higher than it was six months ago, in fact this is only a symptom, because the data does not reflect the actual change in the share of US dollar payments. As the United States pushes some countries out of the SWIFT payment system from time to time, the monopoly of the system is gradually crumbling, and many payment data is not reflected in it. Therefore, the rise in the share of dollars in payments is a false appearance.
So, where does the money from China's sell-off of U.S. bonds go?Undoubtedly, part of this money was used to purchase ** reserves. Over the past 12 months, China's ** reserves have been increasing every month. This action sends a clear signal to the world that China is not only buying**, but will continue to increase its holdings. As we continue to increase our holdings**, the RMB has gradually received more adequate credit support, so the international demand for the RMB is becoming more and more intense. The most direct manifestation of this is that the offshore exchange rate of the renminbi against the US dollar suddenly fell by 1,961 points in November. After the Fed's decision to raise interest rates this week, the US dollar is likely to continue**, while the yuan is expected to continue to strengthen.
The sharp increase in China's foreign exchange reserves came as a surprise to the United States and revealed the growing strength of China's economy. The U.S. has been leaning heavily on the dollar's status as a global reserve currency, but the change in the composition of China's increased foreign reserves suggests that the dollar's position as a global reserve currency is beginning to be challenged.
In the past, China has actively bought dollar assets and held a large amount of U.S. debt. This makes China one of the largest holders of U.S. debt. However, in recent years, China has begun to shift its strategy, **US debt, and **increase** reserves. There are far-reaching strategic considerations behind this move. On the one hand, U.S. bonds reduce their dependence on the US dollar and reduce the risk of foreign exchange reserves. On the other hand, the increase in reserves** has enhanced the international status of the renminbi and prepared it for possible financial challenges in the future.
The increase in China's foreign exchange reserves has multiple implications for the United States. First, China's sell-off of U.S. bonds has weakened the dollar's position and the stability of the U.S. debt market. This makes it difficult for the United States to continue issuing bonds on a large scale, increasing its debt burden. Second, China's increased reserves have provided stronger credit support for the renminbi and laid a solid foundation for the internationalization of the renminbi. This means that in the future, more countries will likely use RMB for settlement**, reducing their dependence on the US dollar. Finally, the increase in China's foreign reserves has strengthened China's voice in the global financial market, creating the conditions for China to exert greater influence in the global economy.
For the United States, the challenges posed by the increase in China's foreign exchange reserves cannot be ignored. The expansion of China's foreign reserves means that China's position in the global economic and financial system is increasing, and the United States must adapt to this new pattern. At the same time, China's U.S. debt has also reduced the scope for the U.S. to raise funds through bond issuance, forcing the U.S. to be more prudent in fiscal policy planning. Against the backdrop of shifting global power centers, the United States needs to re-examine and recalibrate its economic and financial strategy in response to the rise of emerging economies such as China.
The increase in China's foreign exchange reserves and the changes in the composition of its assets are a manifestation of China's growing economic strength and one of the changes in the international financial landscape. China's strategic shift from large-scale purchases of U.S. bonds to increased holdings** will not only help reduce the risk of foreign exchange reserves, but also provide more support for China's voice in international financial markets.
China has changed its investment strategy in foreign exchange reserves and enhanced the international status of the renminbi through the increase in U.S. debt and holdings. This will help reduce dependence on the US dollar, increase the diversification of the use of other currencies, and promote the internationalization of the RMB. The increase in China's foreign exchange reserves and the purchase of ** reserves have had a significant impact on the global financial markets and created opportunities for China to play a greater role in the global economy.
For the United States, the increase in China's foreign exchange reserves and the move of US bonds are undoubtedly a challenge. This means that the United States needs to reassess its position in the international financial landscape and develop a more prudent and prudent economic and financial strategy. At the same time, for other countries, the increase in China's foreign exchange reserves also provides more opportunities for choice, promoting international economic cooperation and development.
To sum up, the increase in China's foreign exchange reserves and the changes in the composition of assets reflect the growing strength of China's economy and its positive impact on the international economic landscape. This change is of great significance to the global financial market, and also provides a new direction and opportunity for China to further participate in global economic governance.