The course of the reform of foreign exchange management system
In the past 30 years, the reform of China's foreign exchange management system has gone through three important stages. First, from 1978 to 1993, the reform started, characterized by a dual-track system. We will implement the foreign exchange retention system, establish and develop the foreign exchange swap market, establish a dual exchange rate system where the official exchange rate and the swap market exchange rate coexist, and implement a foreign exchange management system that combines planning and market. Second, from 1994 to the beginning of this century, in order to meet the requirements of establishing a socialist market economic system, foreign exchange retention and settlement were abolished, bank settlement and sale of foreign exchange were implemented, a single and managed floating exchange rate system based on market supply and demand was implemented, a unified and standardized national foreign exchange market was established, and RMB current account convertibility was realized, thus initially establishing the basic position of market allocation of foreign exchange resources. In particular, we have successfully resisted the impact of the Asian financial crisis during this period. Third, since the beginning of the new century, the market system has been further improved, China has accelerated its integration into economic globalization, further expanded its opening to the outside world, and the foreign exchange situation has undergone fundamental changes. Foreign exchange management has changed from "lenient entry and strict exit" to balanced management, promoting capital account convertibility in an orderly manner, further exerting the role of interest rates and exchange rates, promoting the balance of international payments, and paying attention to preventing international economic risks.
Over the past 30 years, China's foreign exchange management system has undergone the following changes:
First, the RMB current account has been gradually convertible. Before the reform and opening up, foreign exchange receipts and payments were unified and expenditures were unified, and highly centralized planned management was implemented. All foreign exchange income is turned over to the state, and foreign exchange expenditure is allocated by the plan. 1979, the foreign exchange retention system was implemented and the market mechanism was introduced in the field of foreign exchange distribution. With the gradual improvement of the retention rate, the role of the market in regulating foreign exchange receipts and payments has been continuously improved. 1994 the current account can be exchanged conditionally, and the restrictions on the use of foreign exchange by Chinese-funded enterprises for trade and trade-related non-trade operations are cancelled. 1996 12, accepting the obligations in Article 8 of the Agreement of the International Monetary Fund, realizing the convertibility of RMB under the current account, lifting all restrictions on external payment and transfer under the current account, and all foreign exchange transactions under the current account only need to be based on authenticity. Since then, the verification procedures and vouchers for the authenticity of the current account have been continuously simplified, and enterprises have been gradually allowed to keep foreign exchange in the current account as needed, and the annual total amount of foreign exchange purchased by individuals has been managed. The import and export verification system and the reform of foreign exchange management in service trade have been comprehensively promoted.
Second, the degree of convertibility of RMB capital projects has gradually increased. During the planned economy period, China had neither domestic debt nor foreign debt, nor did it accept foreign capital. Since 1979, we have adhered to prudent opening up, and in the order of "inflow priority, outflow priority, long-term priority, short-term priority, direct priority, institutional priority and individual priority", we have promoted the opening up of the capital account in a planned and step-by-step manner, from attracting foreign direct investment, appropriately borrowing from abroad, establishing a qualified foreign institutional investor system, opening up the domestic securities market in an orderly manner, to implementing the "going out" of qualified enterprises. At present, among the 43 capital account transactions classified into 7 categories by the International Monetary Fund, we strictly control mainly the transactions in which non-residents freely issue or buy or sell financial instruments in China, the transactions in which non-residents freely issue or buy or sell financial derivatives in China, and the transactions in which residents borrow money abroad, among which more than 20 items are less restricted or convertible to some extent.
Third, the RMB exchange rate formation mechanism is becoming increasingly market-oriented. Before the reform and opening up, the RMB exchange rate was determined by the government, and the exchange rate was fixed. The exchange rate was only used as an accounting tool. At the beginning of reform and opening up, with the implementation of the foreign exchange retention system, foreign exchange adjustment business was carried out, forming a dual exchange rate system of official exchange rate and market exchange rate adjustment. At the beginning of 1994, the official exchange rate was merged with the market exchange rate, and a single and managed floating exchange rate system based on market supply and demand was implemented. The change of exchange rate is determined by the market. In July 2005, the exchange rate formation mechanism was further improved. The RMB exchange rate is no longer linked to the US dollar, and a managed floating exchange rate system is implemented based on market supply and demand and adjusted with reference to a basket of currencies. The basic role of the market in the formation of exchange rate has been further strengthened, the flexibility of exchange rate has been further expanded, and the role of balance of payments adjustment has been further exerted.
Fourth, the foreign exchange market has been established and developed by leaps and bounds. During the planned economy period, foreign exchange was highly concentrated and there was no foreign exchange market. At the beginning of reform and opening up, the foreign exchange retention system was implemented, and the foreign exchange swap market was established and developed. During 1994, bank settlement and sale of foreign exchange will be implemented, and a unified national inter-bank foreign exchange market and bank-to-customer settlement and sale of foreign exchange market will be established. After the reform of the exchange rate formation mechanism in July 2005, we continued to improve the inter-bank foreign exchange market trading mechanism, expand market participants, increase market trading tools, and further rationalize the relationship between supply and demand. At present, a market system with foreign exchange retail and inter-bank wholesale markets as the main body, supplemented by bidding and inquiry transactions, covering spot, forward and swap foreign exchange trading instruments has been initially formed.
Fifth, the foreign exchange statistical monitoring system has been continuously improved. 198 1 year, China formulated the balance of payments statistics system, and officially compiled the balance of payments table from 1982 and released it to the public from 1985; China's balance of payments report has been released since 2005; Since 2006, the international investment position table has been published; Foreign debt statistics start from 1986; 1994 Start the statistics of bank settlement and sale of foreign exchange; Statistics of cross-border capital flows were conducted from 65438 to 0996. In 2003, the balance of payments risk early warning system was put into operation, and in 2005, the high-frequency debt monitoring early warning system and the market expectation survey system were put into operation. At present, a monitoring and early warning system for cross-border capital flows has been established in line with international practices and requirements and suitable for national conditions.
Sixth, the foreign exchange reserve management system is improving day by day. At the beginning of reform and opening up, China's foreign exchange reserves were extremely small. 1994, in order to meet the needs of the sustained and rapid growth of foreign exchange reserves, with the goal of standardization, specialization and internationalization, we will improve the reserve management system and operational procedures and effectively control all kinds of risks. Establish a management model with investment benchmark as the core, gradually shift from focusing on short-term liquidity management to long-term diversified investment management, establish a mature strategy research, investment decision-making and transaction execution system, and form a relatively complete performance evaluation, risk management and internal control framework. Through active professional investment and effective risk control, the preservation and appreciation of the national foreign exchange reserve assets have been realized.
Practice has proved that the reform of China's foreign exchange management system is successful, which has promoted the development of China's economy, especially the foreign-related economy. Since the reform and opening up, the ratio of balance of payments to total economic output has increased from 19% in 1982 to 126% in 2006. The annual total import and export volume ranks in the top three in the world, and the annual utilization of foreign direct investment ranks in the forefront of developing countries. Foreign trade and foreign investment have a significant pulling effect on economic growth and employment increase. The allocation of foreign exchange resources in China has achieved a leap from planned allocation to market allocation and from scarcity to relative abundance. Since 1994, China's balance of payments has been a "double surplus" except 1998. At the end of 2007, the foreign exchange reserves increased to US$ 65,438 +0.53 trillion, ranking first in the world. Since 2003, China has changed from a net debtor to a net creditor. At the end of 2006, the net foreign financial claims reached $662,654.38 billion. The way of foreign exchange management has gradually changed from pre-approval to post-supervision and from direct management to indirect management, which not only promotes the development of foreign economy, but also pays more attention to preventing international economic risks.
Experience and experience
Looking back on the 30-year reform process, we have the following experiences and understandings:
First, we must persist in emancipating our minds and keeping pace with the times. Reform and opening up is a great revolution led by the Party in the new era. With the deepening of marketization and globalization, new things and contradictions are constantly emerging, which constantly puts forward new challenges and requirements for foreign exchange management. The reform of the foreign exchange management system needs to constantly explore and innovate, dare to overcome difficulties, persist in solving problems in progress by means of development, make bold breakthroughs in key areas and key links such as RMB convertibility, exchange rate formation mechanism and foreign exchange market development in a timely manner according to the objective needs of reform, opening up and economic development, and constantly eliminate institutional and institutional obstacles affecting foreign-related economic development and international payments. According to the development and change of the situation, we should adjust our management ideas and change our management methods in time, from focusing on management outflow to balancing the inflow and outflow of foreign exchange funds, and from pre-approval and direct management to post-supervision and indirect management.
Summary of China's foreign exchange reserves over the years (1950 ~ 2007) Source: website of the State Administration of Foreign Exchange.
Second, we must persist in reform and opening up and serve the overall situation. Reform and opening up is a powerful driving force for the development of Socialism with Chinese characteristics. The practice of 30 years has proved that the sustained and healthy development of foreign economy depends on reform and opening up, and the current promotion of international balance of payments must also rely on reform and opening up. In the reform of foreign exchange management system, we should properly handle the relationship between promoting reform and innovative management. Through market-oriented reform, on the one hand, we should promote the liberalization and facilitation of trade and investment, and constantly enhance the basic role of the market in allocating foreign exchange resources; On the other hand, we should constantly improve the management system, innovate management methods, improve management means, improve management efficiency, and handle the relationship between reform, development and stability.
Third, we should proceed from reality and base ourselves on the national conditions. The primary stage of socialism is the basic national condition of our country. China's socialist market economic system has been initially established, the degree of opening to the outside world has been expanding, the comprehensive national strength has been significantly enhanced, and the market adaptability and competitiveness of enterprises have been continuously improved. However, China has a large population, there is great pressure to increase employment in the process of industrialization and urbanization, the domestic financial market is underdeveloped, macro-control needs to be further improved, and the overall ability of the economic and financial system to resist external shocks needs to be strengthened. As a large developing country and a late-developing country born out of planned economy system, China has no ready-made experience and model to copy in the reform of foreign exchange management system. To combine the national consciousness with the world vision, we should not only learn from the international experience and practice of promoting currency convertibility, but also combine our own characteristics, take advantage of the situation and adapt to local conditions. In practice, we should always pay attention to the strength and rhythm of reform, and actively explore a way to reform the RMB exchange rate formation mechanism and RMB convertibility in line with national conditions.
Fourth, we must adhere to the guidance of Scientific Outlook on Development and promote the balance of international payments. Scientific Outlook on Development is an important guiding principle for China's economic and social development and a major strategic thought that must be adhered to and implemented in the development of Socialism with Chinese characteristics. Comprehensive, coordinated and sustainable development is the basic requirement of Scientific Outlook on Development. Promoting the balance of international payments is the central task of foreign exchange management. The fundamental way to solve the imbalance of international payments is to speed up the transformation of economic development mode, promote the optimization and upgrading of industrial structure and realize the "three transformations" of economic development mode. The reform of foreign exchange management system should always pay attention to the requirements of coordinating domestic development and opening up, and actively support the basic role of policies such as expanding domestic demand and structural adjustment in the balance of payments; Pay attention to coordinating the domestic and international markets and resources, actively support the optimization of export structure, expand imports, improve the quality of foreign capital utilization, broaden capital outflow channels, and promote balanced and coordinated development inside and outside the economy.
Fifth, we must persist in improving supervision and guard against risks. Since 1990s, Asian financial crisis, Latin American currency crisis, American subprime mortgage crisis and other international financial storms have broken out one after another. This shows that under the tide of financial globalization, the risk problem in the financial field is extremely sensitive and sudden, the international capital flow is complex and changeable, and a country's opening to the outside world also increases the possibility of external shocks. The reform of the foreign exchange management system always puts risk prevention in a prominent position. In the overall deployment of reform, we should pay attention to prudence and gradual opening up, and pay attention to adapting to the stage of economic development, the degree of market development, the affordability of enterprises and the level of financial supervision. In the process of reform, pay attention to the comprehensive support with the reform in related fields; At the same time of deregulation, we will constantly strengthen and improve the supervision of compliance and authenticity of foreign exchange business, supervise banks to perform their duties of subrogation supervision, strengthen supervision means, strengthen statistical monitoring and early warning, and guard against the impact of international capital flows.
Practice and innovation are endless. In accordance with the strategic plan of the 17th National Congress of the Communist Party of China, we should persist in emancipating our minds, seeking truth from facts, advancing with the times, be brave in reform and innovation, not be afraid of any risks or confused by any interference, continue to solve the problems in progress by means of reform and development, increase the innovation of institutional mechanisms, and strive to make new breakthroughs in the reform of key links and aspects in the foreign exchange field; Continue to deepen the understanding of the laws of market economy in the foreign exchange field and give better play to the basic role of the market in allocating foreign exchange resources from the system; Continue to take Scientific Outlook on Development as the guide, accurately grasp the relationship between balance of payments and macroeconomic development, actively cooperate with the implementation of national macro-control and structural adjustment policies, constantly improve the market mechanism and management system of balance of payments adjustment, and promote balance of payments and macroeconomic stability; We will continue to steadily and orderly promote the convertibility of RMB capital account and guard against international economic risks.