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China has lost $271.1 Billion through FR during the past 7 years [Copy link] 中文

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Post time 2011-5-5 17:03:33 |Display all floors
A government official from National Development and Reform Commission (NDRC) of China, Zhang Anyuan, said,
China has lost $271.1 Billion through foreig reserves during the past 7 years.

If the change rate of US dollar : Chinese yuan reached 6, the loss would reach $578.6 billion since 2003.

That is to say, except the central bank of Chinese government, None of commericial bank would make such a deal.
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Post time 2011-5-5 17:06:13 |Display all floors
So it is an urgent task to diversify foreign reserves.
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Post time 2011-5-5 17:06:39 |Display all floors
source: h ttp://finance.ifeng.com/news/20110505/3985237.shtml
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Post time 2011-5-5 17:25:25 |Display all floors
Probably this loss is decided by the exchange rate..

Supposed Chinese government own $ 1 trillion dollar when 7 Chinese yuan can change into 1 US dollar.

If the exchange rate reached to 8 chinese yuan for 1 US dollar, China would win
$0.125 trillion
(8 trillion Chinese yuan - 7 trillion previous Chinese yuan)/8=$ 0.125 trillion

If the exchange rate decreased to 6 Chinese yuan for 1 US dollar, China would lose $0.167 trillion
(6 trillion Chinese yuan - 7 trillion previous Chinese yuan)/6=-$0.167 trillion
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Post time 2011-5-5 17:26:57 |Display all floors
foreign reserves work for controlling, or manipulating, stablizing exchange rate.

[ Last edited by 468259058 at 2011-5-5 05:28 PM ]
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Post time 2011-5-5 17:33:04 |Display all floors
Chinese foreign reserves is as much vaule as 1/2 Chinese total GDP, much higher than 1/2 Chinese GNP.
China has printed 20 trillion extra Chinese yuan. It greatly contributed to the present high inflation.
If U.S government went on printing more US dollar through different way, such as quatitive easing, China would suffer heavy loss from the present foreign reserves.
Huge imbalance would lead to type of conflicts among nations around the world.

From these factors, I agree that
"it is an urgent task to diversify foreign reserves."

[ Last edited by 468259058 at 2011-5-5 05:37 PM ]
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Post time 2011-5-5 19:07:44 |Display all floors
"it is an urgent task to diversify foreign reserves."


Then if other economies print, China loses. You see, as a central bank, you always print more than necessary, because you never want an inflation - so no matter what, China will lose. Therefore, China should focus on making the foreign exchange reserves smaller by having an import surplus for several years until they're on a reasonable level.

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