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China's huge foreign exchange reserves continue to
grow rapidly in recent years.
Experts said the Central Bank's foreign exchange assets
have incurred huge losses. It is imperative to divert them.
Analysts believe RMB needs to be internationalized and
freely exchanged. China's foreign currency policy and
system have rendered Chinese people rather miserable.
Zhang Anyuan, director of financial research in China's
development and reform institute (NDRC) said,
the loss of foreign exchange assets with the central bank
is appallingly huge. Due to the exchange rate hike,
as of the end of 2010, the Central Bank has lost
US$271.1 billion over the past seven years.
If future exchange rate of RMB to USD rose to six,
the loss will climb up to 578.6 billion USD.
Zhang Anyuan stressed the loss can't be covered by
investment income. Except for the central bank as
the "government purse", no institution will accept such
commercial trading loss. He believes it's urgent
to diversify foreign exchange reserves.
Central bank data showed by the end of March, China's
foreign exchange reserves reached 3,044.7 billion USD
about 1/3 of global foreign exchange reserves.
HK Oriental Daily published an article "Foreign Reserves
Lost Two Trillion, Who Is Guilty?". As Zhang Anyuan
calculated, China's foreign exchange reserves in past 7
years lost nearly two trillion yuan, about 1,400 yuan
per capita. Chinese Authorities claimed no money
to implement free medical care nationwide, which needs
only 400 billion yuan, much less than the above loss.
Sun Laixiang, professor in Department of Finance in
Oriental and African Studies of Univ. of London,
told BBC that China has no need to hold such huge
foreign exchange reserves, authorities should change
the highly centralized model, marketize RMB, and allow
enterprises to have more management authority on it.
High foreign exchange reserves make capital inflows
and outflows contradictory. On one hand, economic
development requires a lot of money from abroad;
on the other hand, authorities increase foreign exchange
reserves to "output" huge low-cost funds.
According to China's foreign exchange policy, to export
1 dollar commodity, same value of RMB will be printed
to balance it. In 2010, China's foreign exchange reserves
was about 2.8 trillion USD, more than 18 trillion yuan
were printed, equivalent to nearly 6-fold of 3.4 trillion
market currency in circulation (M0) in 2008 .
Economist Lang Xianping pointed out the huge amount
of RMB balancing foreign exchange, were passed on
to people as inflation, causing a sharp depreciation of
currency, and sharp rise in prices. The resulting
phenomenon is absurd that the more export and
foreign exchange, the more miserable people are.
Why is the CCP so 'stupid'? Why don』t the authorities
"Return export income to the public to improve people's
standard of living ", or "reduce exports, and leave more
on domestic market"? Isn't it that the best solution?
Critic Gao Zitan said on New Era magazine, as early as
the CCP established its regime, it had a working-peasant
"scissors difference" in price, to suppress agricultural
products prices, exploiting farmers to support workers.
Now it's "scissors difference" between domestic and
international commodity prices. Exploit cheap labor,
export cheap goods, along with its foreign policy,
repeatedly plunder people's wealth.
Gao Zitan said essentially 3 trillion foreign exchange
reserves have become CCP's assets, people do not
know its specific uses, let alone any decision on it.
NTD reporters Li Qian and Li Ruolin