Huge foreign exchange reserves is not only central bank vice governor , Yi Gang, Secretary burden SAFE eyes. Recently , Premier Li Keqiang during a visit to Africa , said : "I am here , frankly, more of our foreign exchange reserves have been a great burden , because it wants to become the country's monetary base will affect inflation ."

The latest central bank data show that as of the end of March 2014 , China's foreign exchange reserves reached $ 3.95 trillion , breaking the $ 4 trillion mark in between us disappear. How to revitalize the stock , control increment , has long attracted the attention of decision makers and experts and scholars .

In fact, Li Keqiang 's remarks is not the first time the issue of foreign exchange reserves position . As early as June 2013 , the State Council executive meeting on the study to determine the use of foreign exchange reserves to innovate and expand the platform and the foreign exchange reserves of commercial banks entrusted loan -lending channel.

External storage platform entrusted loans urgently expand

By the end of 2013 , Yi Gang, in a media interview, said that was about $ 3.7 trillion in foreign exchange reserves have exceeded the optimal size , and then continue to increase it uneconomical.

SAFE worthwhile performance in the " China International Financial Report 2013 " is also displayed in : 2013 Chinese investment income deficit of $ 59.9 billion , expanding by 70%. "The main problem reflects the structure of China's foreign assets and liabilities , gains and foreign investment in China grew by 23% compared to last year ." The report said .

For a long time , China's foreign exchange reserves investment in low-yielding U.S. Treasury bonds is based. Bank of China ( 2.63 , -0.02 , -0.75 % ) Wen Bin, head of macroeconomic research to the Institute of International Finance , " First Financial Daily" said that the use of foreign exchange reserves investment can no longer be based solely in U.S. dollar bonds . To this end, he proposed investment in the stock of foreign exchange reserves, using four methods: one is between the currency can be adjusted , such as investment euro, yen , etc. ; Second, to increase gold reserves ; Third , a portion of foreign exchange reserves to the CIC and other sovereign funds as possible to increase value-added foreign exchange reserves , hedging ; Fourth, to promote foreign reserves entrusted loans and bank -lending platform .

" Entrusted loans yields clearly higher than yields on U.S. Treasuries ." Said Wen Bin , entrusted loans and turn the so-called foreign exchange reserves mainly refers to loans SAFE commissioned the development banks and commercial banks , to give them a part of foreign currency reserve assets , specifically for entrusted loans, foreign currency loans to the needs of the enterprise by the CDB and commercial banks , entrusted loans provided by foreign exchange reserves .

Reserves entrusted loan is not something new . January 2013 , SAFE , the official foreign exchange reserves, the use of innovation related work answering reporters' questions , said that in recent years , in good monetary policy and foreign exchange management work, innovative use of foreign exchange reserves to support financial institutions services entities economic development and "going out" strategy, and in the foreign exchange reserve management agency , established reserves entrusted loan office (SAFE Co-Financing), responsible for innovative use of the work of foreign exchange reserves .

June 2013 , Li Keqiang chaired a State Council executive meeting , study identified : support for enterprises to "go ." Innovative use of foreign exchange reserves , expanding foreign exchange reserves of commercial banks entrusted loan -lending platforms and channels , to develop export credit insurance. Promote foreign direct investment in individual pilot .

Also in May during Li Keqiang 's visit to Africa, a local Chinese-funded enterprises responsible to him to reflect current business overseas development challenges faced in financing , Li Keqiang this site to learn more about and respond . He said the State Department has noted this problem and made ​​a special study of the policy can be implemented early as next week .

Some analysts on the "First Financial Daily" said , Li Keqiang above statement pointing perhaps including the expansion of foreign exchange reserves of commercial banks entrusted loan -lending platform and channel specific policies .

Control can not rely on incremental capital liberalization

In revitalize the stock at the same time , how to control the increment is another important issue.

"Our country 's foreign exchange reserves have exceeded any reasonable range ." Chinese Academy of Social Sciences academician Yu Yongding, "First Financial Daily" said. Yu Yongding that, for the high foreign exchange reserves , not only to revitalize the stock , but should pay attention to is the control increment. Yu Yongding said that , we must first solve the problem is to stop further increase in foreign exchange reserves , and the easiest way to solve this problem is to stop the central bank intervention in the foreign exchange market . Fundamental solution is for China to attract investment and trade policies to be adjusted.

"Encouraging foreign investment is necessary , but it also faces many challenges. Foreign investment can not increase quickly , and gradually pushed got to have some preparation work and now we have added a lot of overseas investment is actually very fast , but foreign exchange reserves have increased faster , an increase of $ 500 billion last year , the first quarter of this year increased by $ 125 billion , according to this rate, this may have to increase $ 500 billion . " said Yu Yongding , capital outflow of foreign exchange reserves as fast as the speed increases , increased foreign investment is not sufficient to solve this problem. He believes that the RMB regulatory lag, arbitrage arbitrage fierce, short-term capital inflows, a very large number , but also a prominent issue .

Wen Bin said: " open capital good opportunity missed , in 2012 , when the capital deficit , if we steadily open capital projects may not be formed in 2013 a lot of hot money inflows , resulting in capital account surplus too high if there is a two-way flow mechanism , the high capital surplus will be drastically reduced . "

Wen Bin believes that the Government fully open capital account cautious . He said that after the full liberalization of the capital account , a lot of cross-border capital flows RMB exchange rate will have an impact , and thus affect the stability of the market. In the current economic downturn , the real estate prices are still high , the liberalization of capital projects is too large, too fast could lead to further devaluation of the opening exchange rate will lead to decline in real estate prices could impact financial stability , thereby affecting the real economy.

And Yu Yongding, also believes that in the presence of a large number of market distortions , cross-border capital flow freely is likely to be more harm than good . Yu Yongding said that the timing of capital account liberalization is important , we must first establish a risk management mechanism of short-term money market and, more importantly , in the liberalization of capital controls while ensuring the independence of monetary policy.