The Evolution of China's Foreign Exchange System
The process of China's foreign exchange system reform can be roughly divided into four stages.
(1) highly centralized foreign exchange management (1953— 1978)
From the founding of New China to the reform and opening up, China's productivity is relatively backward, and its commodity export capacity is weak. In addition, the economic blockade of China by capitalist countries has caused a large gap in foreign exchange funds, and it is insufficient in organizing imported materials and participating in international exchanges, not to mention foreign investment.
In this context, in order to ensure the key use of limited foreign exchange funds, China has implemented a highly centralized planned economy foreign exchange management system, and implemented centralized and unified management of foreign exchange receipts and payments. The State Council authorized the People's Bank of China to exercise the duties of foreign exchange management, and China Bank is the only specialized foreign exchange bank in China. In a word, all foreign exchange earnings of an enterprise must be sold to the state, and when foreign exchange is needed, it will be uniformly distributed by the state. At the same time, foreign borrowing and foreign direct investment in China are restricted. The state formulates foreign exchange revenue and expenditure plans every year, maintains the balance of foreign exchange revenue and expenditure through mandatory plans and administrative means, implements a fixed exchange rate system, and strictly pegs exchange rate arrangements.
(2) Exchange rate dual-track system period (1979-1993)
In 15 years after the reform and opening up, as an integral part of the market economic system reform, China gradually introduced the market mechanism into the field of foreign exchange distribution, implemented the dual-track system of planned distribution and market regulation, and introduced the market distribution mechanism on the basis of retaining the original planned revenue and expenditure system. 1979 In March, the State Council approved the request of the People's Bank of China on the reform of the banking system in China and decided to establish the State Administration of Foreign Exchange. In terms of exchange rate, the state implements a dual exchange rate system in which the official exchange rate and the exchange rate in the foreign exchange swap market coexist, which provides the basic conditions for the swap rate to gradually play its role. 198 1 year 1 month 1 day, the internal settlement price of China trade is 1 USD = 2.80 RMB, while the official quotation is 1 USD = 0/.53 RMB. In fact, according to the official quotation at that time, it was difficult to buy US dollars, resulting in a situation of "valuable without market". Since then, with the continuous appreciation of the US dollar, the official exchange rate has been depreciating. It was not until 1984 and 12 that the official quotation gradually leveled the internal settlement price of trade. 1985 65438+ 10/month 1, cancel the internal settlement price of trade. At the same time, in order to encourage enterprises to earn foreign exchange through export, the state implements a foreign exchange retention system, that is, foreign exchange is managed and balanced by the state in a unified way, and a certain proportion of foreign exchange is reserved for foreign exchange-earning enterprises to solve the funds needed for imported materials. On this basis, the country began to establish a tangible foreign exchange swap market. If there is a surplus of foreign exchange retained by an enterprise, it can be sold to enterprises that need foreign exchange through this market. At this point, the market mechanism began to be introduced into the field of foreign exchange distribution. By the end of 1993, 80% of China's import and export receipts and payments were settled at foreign exchange swap market prices.
At this stage, the state relaxed the access of banks' foreign exchange business, allowing banks to handle foreign exchange settlement business from the original Bank of China to other commercial banks such as Industrial and Commercial Bank of China and Agricultural Bank of China. With regard to the introduction of foreign capital, the state has formulated and implemented policies to encourage the use of foreign capital, relaxed restrictions on the use of foreign capital, encouraged foreign capital to enter China, and implemented a series of preferential policies such as tax exemption, low tax and tax refund for foreign-funded enterprises entering China according to relevant policies. At the same time, domestic residents are allowed to hold foreign exchange, open foreign exchange savings accounts in banks and issue foreign exchange certificates.
(3) exchange rate consolidation period (1994-2004)
1993165438+10 In October, the Third Plenary Session of the 14th CPC Central Committee adopted the Decision on Several Issues Concerning the Establishment of a Socialist Market Economic System, demanding the reform of the foreign exchange management system, the establishment of a managed floating exchange rate system based on market supply and demand, the establishment of a unified and standardized foreign exchange market, and the gradual transformation of RMB into a convertible currency. Accordingly, the People's Bank of China carried out a series of foreign exchange management system reforms in 1994. Cancel the payment and retention of foreign exchange and implement the system of bank settlement and sale of foreign exchange; Exchange rates should be merged and a single and managed floating exchange rate based on market supply and demand should be implemented; Establish a national unified and standardized inter-bank foreign exchange market; Relax the restrictions on the RMB current account and create conditions for the conditional convertibility of the RMB current account; Continue to reiterate the prohibition of domestic foreign currency pricing, settlement and circulation, stop issuing foreign exchange certificates and gradually withdraw from circulation. 1 99665438+February1,China realized the convertibility of RMB under the current account.
(4) Reform of exchange rate formation mechanism (since 2005)
On July 2 1 2005, China once again announced the reform of the RMB exchange rate formation mechanism, from a single peg to the US dollar to a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies. The specific performance is as follows:
Reform the RMB exchange rate system. The RMB exchange rate is no longer pegged to a single dollar, and a more flexible and market-oriented RMB exchange rate system is gradually formed. China adheres to the three principles of initiative, controllability and gradualism in the reform of RMB exchange rate.
Adjust the RMB exchange rate level. China will appreciate the exchange rate of RMB against USD by 2% at one time, and the transaction price of USD against RMB will be adjusted from 8.28 yuan to 8. 1 1 yuan. Since then, the RMB has entered the unilateral appreciation channel. By 20 14, 14130, the unilateral appreciation of RMB ended and entered a period of wide fluctuation.
Adjust the benchmark exchange rate price and listing exchange rate system. Appropriately expand the floating range of RMB exchange rate, allowing the daily floating range of RMB against the US dollar to be expanded to 2%; Expand the authority of independent pricing of banks, etc.
Constantly improve the foreign exchange trading system. Increase trading entities, allow qualified non-financial enterprises and non-bank financial institutions to enter the spot inter-bank foreign exchange market, and expand the bank-to-customer forward foreign exchange settlement and sale business to all banks; Introduce the dollar market maker system and inquiry trading mechanism in the inter-bank market; Introduce RMB into foreign currency swap business.
Over the past 40 years of reform and opening up, China's foreign exchange market has grown from scratch, from small to large. Although it is still far from the goal of internationalization and free convertibility, it has to be said that earth-shaking changes have taken place compared with the past. According to the statistics of the State Administration of Foreign Exchange, as of 20 19 and 12, the total turnover of China's foreign exchange market (excluding foreign currency pair market) was 17. 10 trillion yuan (about 2.44 trillion US dollars). Among them, the bank-to-customer market turnover is 2.7 1 trillion yuan (about 387 1 billion dollars), and the interbank market turnover is 14.38 trillion yuan (about 2.05 trillion dollars); The cumulative turnover in the spot market was 6.78 trillion yuan (equivalent to 966.5 billion US dollars), and the cumulative turnover in the derivatives market was 10.32 trillion yuan (about10.47 trillion US dollars). From June 20 19 to February 20 19, the total turnover of China foreign exchange market was 200.56 trillion yuan (about 29. 12 trillion US dollars). Generally speaking, the volume of foreign exchange transactions in China is increasing year by year. With the continuous development of China's economy, it is expected to hit a new high in the future.
B
Two orioles singing green willows-offshore and onshore RMB exchange rates
Because the RMB has not been fully opened, the domestic RMB has certain control over foreign exchange, while the overseas RMB is relatively free in foreign exchange because there is no control. In this case, the circulation and exchange of RMB have gradually formed two distinctive markets. The domestic RMB market is called onshore RMB (CNY) market, and the overseas RMB market is called offshore RMB (CNH) market. Offshore RMB market refers to the market outside Chinese mainland where RMB deposits and loans can be made. At present, China and Hongkong are the most active offshore RMB markets, and other countries such as Singapore, London and Taiwan Province Province of China are also actively striving for the role of offshore RMB center.
There are great differences between the two markets in terms of participants, price formation mechanism and trading volume. The onshore RMB (CNY) market has a long development time and a large scale, but its supervision is stricter. The central bank is an important participant in the foreign exchange market, which means that the onshore RMB exchange rate is greatly influenced by the central bank's policies. The offshore RMB (CNH) market has a short development time and a small scale, but it is less restricted. It is more influenced by international factors, especially the overseas economic and financial situation, which fully reflects the relationship between supply and demand of RMB in the market.
The offshore RMB exchange rate has a stronger response to unexpected economic data. When economic data exceeds expectations, the exchange rate will reflect the market's adjustment to economic expectations for the first time. For example, unexpected growth may lead to currency appreciation, and the offshore market reacts more strongly to data, especially unexpected data, because there is no supervision. The research shows that among all kinds of macro data, the over-expected/under-expected GDP data will have a significant impact on the spread of onshore and offshore RMB exchange rates.
The influence of the international financial market, especially the change of overseas investors' risk preference, has a greater impact on the RMB exchange rate in the offshore market, and the offshore market is more closely linked with the international financial market, while the onshore market is less sensitive to these influences due to regulatory reasons. Therefore, when the international financial market is turbulent, the onshore and offshore exchange rates usually have obvious spreads.