Foreign trade surplus under the foreign reserves do not rise but fall, the relevant personnel interpreted as a result of exchange rate translation.
On March 7, China’s General Administration of Customs and China Foreign Exchange Administration released data at the same Time. Customs data show that January to February, China achieved a trade surplus of 103.26 billion U.S. dollars, while the Foreign Exchange Bureau data show that the end of February China’s foreign exchange reserves fell by 5.7 billion U.S. dollars compared to the end of January. Foreign reserves fell instead of rising under the foreign trade surplus, which was interpreted as a result of exchange rate translation by the relevant personnel.
According to “Interface News” reports, China’s General Administration of Customs released data on March 7: the first two months of this year, the total value of imports and exports of 5.44 trillion yuan, an increase of 32.2% over the same period last year (the same below). Among them, exports of 3.06 trillion yuan, up 50.1%, an increase of more than 50%; imports of 2.38 trillion yuan, up 14.5%.
In the month of February, exports of 1.33 trillion yuan, up 139.5% year-on-year.
Data from the General Administration of Customs reported Sunday that, in dollar terms, China’s January-February exports rose 60.6 percent year-on-year, a growth rate of 42.5 percentage points higher than in December last year, and imports rose 22.2 percent year-on-year, a growth rate of 15.7 percentage points faster than in December last year.
In the first two months of this year, a trade surplus of 103.26 billion U.S. dollars was achieved, compared with a deficit of 7.43 billion U.S. dollars in the same period last year.
At the same time, The Punch reported that the latest data released by the State Administration of Foreign Exchange (SAFE) on March 7 showed that China’s foreign exchange reserves stood at US$320.4994 billion at the end of February 2021, down US$5.677 billion, or 0.18%, from the end of January.
Wang Chunying, deputy director of the Foreign Exchange Bureau and spokesman, said at the conference in response to questions from reporters that the international financial market, influenced by vaccine progress, fiscal policies of major countries and Inflation expectations, the dollar index rose and bond asset prices of major countries fell. The combination of factors such as exchange rate translation and asset price changes resulted in a small decline in the size of foreign exchange reserves during the month.
According to the report, Zhao Qingming, an expert on international financial issues, argued in an interview with The Punch that although foreign exchange reserves fell slightly in February, they were still in a normal fluctuation range, and exchange rate translation was the most important reason affecting the change in foreign exchange reserves in February.
He said that in February, the dollar index rose slightly, non-dollar currencies in a down state, especially the yen fell more, the yen fell 1.8% in February, converted into dollars will shrink, the scale of this part of the shrinkage is probably between 5 billion to 10 billion U.S. dollars; asset prices, the U.S. long bond yields rose in February, book prices fell, will also cause book shrinkage of foreign exchange reserves. And in the first two months of this year, foreign exchange reserves both showed a small decline.
If exchange rate translation is the most important reason affecting the change in foreign exchange reserves in February, how much will the continued appreciation of the RMB affect China’s foreign exchange reserves in the future?
Since the low point in May 2020, the yuan has appreciated by 10%, and experts believe there is still room for appreciation.
According to Tencent Finance, Yao Yang, an economist and president of Peking University’s National Development Institute, said recently that there is still room for the yuan to appreciate, with the exchange rate against the dollar likely to surge to 6.3 this year and another 3-4 percent appreciation still possible.”
Unless the Federal Reserve starts to raise interest rates, resulting in a massive flow of dollars and also other countries’ currencies to the United States. But he thinks it will be difficult to raise interest rates after Biden takes office.
As we all know, a significant appreciation of the yuan would lead to a weakening of the country’s export competitiveness, slower export growth and faster imports. It will not only weaken the stable base of foreign exchange reserves, but also affect domestic employment and the growth rate of the national economy.
In this regard, many netizens believe that “already in the crazy naked”, if the appreciation to 6.3, “you let foreign trade all to die?” “Excess capacity in the domestic market, the lack of competitiveness in export earnings, the exchange rate is a problem that needs to be treated with caution.”
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