The Risk Of US Debt Is Still &Nbsp; China Is Looking For A Way Out.

Interview with Professor Xi Junyang, School of finance, Shanghai University of Finance and Economics, deputy director of modern financial research center.

At present, the United States is in poor overall economic condition, and is also the largest debtor nation in the world.

The clamour for many days of US debt raising was eased in August 2nd, but the uncertainty of the US economy still worries people. By the end of 6 this year, the balance of foreign exchange reserves in China has reached US $3 trillion and 197 billion 500 million.

The proportion of US dollar assets in foreign exchange reserves is as high as 70%, and China is increasingly aware of the danger.

How should we cope with the increasing foreign exchange assets?

What is the problem of foreign exchange management?

What is the key to solve the problem?

In this regard, China Economic Times reporter interviewed Professor Xi Junyang, School of finance, Shanghai University of Finance and Economics.

There may be great losses in holding the US debt.

China Economic Times: US debt

Xi Jun sheep: the US economy is in poor condition at the same time, and it is also the largest debtor nation in the world.

The more debt, the more difficult it is to repay debts later. At this point, the breach of contract is spared. It is hard to say whether it will be spared.

Now the whole world is worried about the prospect of the dollar, which is not conducive to the stability of the US dollar, and this series of unfavorable factors will make the US dollar weaker and create a vicious circle.

If China continues to hold us debt, it may lose a lot.

China Economic Times: how to change the current situation of China's massive holdings of US debt?

Xi Junyang: gradually changing the structure of our foreign currency holdings, reducing the holding of US dollars and increasing the proportion of other currencies.

Although there are not many other currencies to choose from, exchange rate changes are just between several currencies.

It is impossible for the US dollar to fall, the Japanese yen to fall, and the euro to fall. If we change the US dollar into other currencies, the average apportionment and the appropriate proportion of the exchange rate will change the risk of exchange rate.

Of course, this realization needs a process, because we now have a large number of US dollars, and we have hundreds of billions of dollars in revenue every year. If we want to convert most of the US dollars into other currencies in a short time, we will inevitably lead to the fluctuation of the US dollar exchange rate, and finally, there will be a negative impact.

Only with the increase and stability of foreign exchange can we gradually convert US dollars into other currencies and achieve the goal of optimizing foreign exchange reserves.

Reduce foreign reserves and ease import controls

China Economic Times: apart from buying other currencies, is there any other way to digest such huge foreign exchange reserves?

Xi Junyang: from the foreign exchange reserve itself, it is just a few.

China Economic Times: what causes foreign exchange reserves to be so huge?

How to solve this problem?

Xi Junyang: first of all, from a trade point of view, the policy encourages exports and restrices imports. The result is that foreign exchange is much more, foreign exchange is less and trade continues to be surplus, which has become a major source of foreign exchange accumulation.

Secondly, the influx of hot money also has a certain impact.

Because of the strong expectation of RMB appreciation, everyone is willing to turn assets into Renminbi to get profits.

Moreover, foreign investment is also a source of foreign exchange increase.

We have not been very open to overseas investment.

That is to say, outside investment has come in and we can not get out of foreign investment. If this situation does not change, the RMB will continue to appreciate, and foreign exchange will flow into large quantities.

To sum up, in a word, we have channels to enter, and no channels to go out.

This is the root cause of the foreign exchange problem.

The government is already aware of this situation, so we are also considering easing the control of imports. For example, now that the Ministry of commerce is considering lowering the tariffs on luxury goods, we are also exploring the possibility of allowing foreign investment and strengthening personal investment channels. If we open up foreign investment, reduce import restrictions, and encourage export incentives to return to the norms of the market, then the balance of payments will tend to balance and stability. Under such circumstances, foreign exchange management problems can be fundamentally stabilized.

Foreign exchange balance is the root cause of the problem.

China Economic Times: how to reform the exchange rate system?

What do we do if we want to achieve the purpose of saving money in the people?

Xi Junyang: the reform of exchange rate system needs to be realized slowly, just as I do not agree with the appreciation of RMB.

If it is demanded that the renminbi be fully traded in the market, the renminbi will be traded.