Exchange Rate Manipulation and Sino-US Currency Relations

On August 9th, the International Monetary Fund (IMF) issued China’s annual fourth-term consultation report, reaffirming that China’s current account surplus fell in 2018, and the RMB exchange rate was basically in line with economic fundamentals.

The exchange rate issue has always been the core issue of the financial market. At the third China Finance Forum for 40 people held at the Yichun Forum on August 10, the exchange rate has become a concern of many experts and scholars. Including the 12th CPPCC Vice Chairman, CF40 Standing Council Chairman Chen Yuan, CF40 Academic Committee Chairman, Peking University National Development Research Institute Vice President Huang Yiping, CF40 member, Central Bank International Director Zhu Xi Speaking of the current RMB exchange rate situation.

Chen Yuan, vice chairman of the 12th National Committee of the Chinese People’s Political Consultative Conference and chairman of the CF40 Standing Committee, delivered a keynote speech on “exchange rate manipulation” and Sino-US currency relations. He pointed out that the United States identified China as a “currency manipulator” and a “trade war” upgrade. The important signs are more global and long-term. From a currency point of view, the ratio between the two currencies will further amplify the shortcomings of the renminbi and the dollar, and challenge the international status of the renminbi. Therefore, the exchange rate issue is only the beginning of a “currency war”, and we must have a clear understanding of this.

Chen Yuan pointed out that China currently has huge US dollar foreign exchange reserves and more than one trillion US dollars of bonds. From a geopolitical point of view, the United States has always been very vigilant because the US bonds held by China will cause the US financial market to be somewhat restrained by China. Therefore, in the financial market, the United States is not without strategic weakness.

However, the opening of the “financial war” with the exchange rate has expanded its depth and breadth and influence more than the “trade war” of the past. Among them, the interests of China and the United States are intertwined, and it is very difficult to unilaterally want to completely decouple and avoid negative effects. China must do a good job in the financial sector of the two countries to continue to prepare for the development of China, and strive for a good result. If there is not sufficient preparation, the development of the problem will cause more damage once it exceeds our expectations. We must try our best to prevent the “financial war” from expanding and causing greater harm to our country.

Chen Yuan believes that foreign exchange reserves are a huge asset of China and are vital to the financial market, directly affecting China’s currency issuance and the stability of the renminbi. However, at present, foreign exchange has become the target of launching a trade war or financial war in the United States. Therefore, China should rethink the strategic issue of foreign exchange, and must strategically position foreign exchange reserves from the original “highly reliable core wealth” to the “new focus of financial warfare.” Even the new battlefield” is converted. How to protect and effectively allocate China’s foreign exchange reserve resources from the impact of the “financial war” has become the most important issue. The following is the full text of Chen Yuan’s speech.

On August 6, Beijing time, the US Treasury issued a statement stating China as a “currency manipulator”, indicating that the Sino-US situation has undergone new changes. Last year, when I discussed the Sino-US trade war, I pointed out that it will take time for the “trade war” to turn into a “financial war.” The current US behavior is the embodiment of the ultimate pressure. The United States intends to make China’s biggest concessions in economic and trade negotiations by creating high pressure. Of course, we should also look at the unilateralism of the US government with a calm attitude.

The exchange rate issue is one of the core issues in financial markets. The exchange rate policy has a certain impact on the circulation of RMB, inflation and even economic growth. Therefore, for the money market, the exchange rate issue is a more fundamental and important issue. It can be said that the exchange rate policy directly affects the relationship between China and the global monetary system, especially the relationship between China and the US currency system, the world’s largest economy. Therefore, the exchange rate is a measurable and tangible currency-price relationship that is closely related to the country, the enterprise and even the individual. It is a quantifiable key indicator.

The special status of the exchange rate makes it always at the top of the global trade chain and financial chain. Therefore, the United States has identified China as a “currency manipulator”. In fact, it wants to harass China’s financial market and undermine China’s economic order through the implementation of hegemonic authority. In the game process of Sino-US trade negotiations, it can play the role of “making chaos and fighting opponents.” The United States has listed China as a “currency manipulator” and is an important action for the United States to upgrade the “trade war” to a “financial war.” It can be seen as a new sign of a stage. Although the launch of the “financial war” may have been in the US’s layout, the introduction of specific actions is obviously of symbolic significance.

An important question at present is what methods and means will the US adopt after raising the exchange rate issue? If the exchange rate issue continues, how big is its scope of influence and depth of influence? I believe that if the United States wants to expand and deepen the exchange rate issue, and there are still many constraints, it will also have many problems, which will not only affect China, but also affect the United States. The implementation of the exchange rate issue on China’s financial and economic markets has a high cost and cost. It can be seen that such a key indicator of the exchange rate will actually affect the economic relationship between the entire financial system and the country. All the trade relations and economic relations between the two countries will be affected. Take Japan as an example. After the “Plaza Agreement”, the yen was forced to appreciate, affecting the re-layout of the entire Japanese economy. A large amount of capital has been invested in the real estate market and has created a bubble that has hit the Japanese economy. At the same time, some industrial capitals are looking for new investment space abroad, which has promoted Japan’s overseas investment and internationalization, which has brought Japan’s economic development to a new level.

This shows that the consequences of the exchange rate issue are multifaceted. From the experience of Japan, the negative impacts include the real estate bubble and the financial bubble, but the positive impact is to force Japanese companies to find new investment footholds in overseas markets. Therefore, the development prospects of the exchange rate issue are full of uncertainty. It is a very crucial issue for China to learn from the historical experience of other countries and seriously consider how to respond appropriately to the exchange rate issue.

The United States has identified China as a “currency manipulator” and is an important symbol of the escalation of the “trade war”. It is more global and long-term. From a currency point of view, the ratio between the two currencies will further amplify the shortcomings of the renminbi and the dollar, and challenge the international status of the renminbi. Therefore, the exchange rate issue is only the beginning of a “currency war”, and we must have a clear understanding of this. Compared with the US dollar, the shortcomings of the renminbi are still very obvious. At present, the renminbi is still a currency dominated by the domestic economy, and the internationalization of the renminbi is still in its infancy. Although the renminbi has achieved important results in joining the SDR, the proportion of renminbi used in investment and settlement is still relatively small worldwide. In this case, we should try to avoid a positive conflict with the US dollar. In terms of the current ability of the RMB, a positive confrontation with the US dollar will not be conducive to the current position.

Although China has made great achievements in the domestic monetary and financial markets, in the international market, the United States has long dominated the world after World War II, and the US dollar has naturally become a currency with a “hegemonic status.” We should not use our long-term strengths to combat our relative shortcomings. It is necessary to avoid the “financial warfare” to be carried out on a larger scale, paying particular attention to the negative impact of the exchange rate issue on China. In terms of intentions, the United States is only asking for the appreciation of the RMB exchange rate to suppress China’s exports. After the “breaking of the RMB” against the US dollar, it has indeed improved the environment for domestic enterprises to export in the short term, but this is obviously not in the interest of the United States. Under this circumstance, the United States may take further measures in other investment and financial inter-bank relations. In the face of these potential problems, we must be highly vigilant and fully prepared.

By suppressing China’s financial market and curbing the Chinese economy through the exchange rate, the United States certainly hopes to gain more benefits. To a large extent, the United States wants to decouple in Sino-US relations. However, in the exchange rate market and the money market, the decoupling between China and the United States is not easy. China currently has huge US dollar foreign exchange reserves and more than one trillion US dollars of bonds. From a geopolitical point of view, the United States has always been very vigilant because the US bonds held by China will cause the US financial market to be somewhat restrained by China. Therefore, in the financial market, the United States is not without strategic weakness. However, the fact that we have mastered only has a partial impact on the United States, and it does not constitute a strategic height to deter the US from the overall situation, but it can still play a certain role. Therefore, the decoupling of financial markets between the two countries or the decoupling of the foreign exchange market is a difficult matter. Since the United States wants to suppress China in this respect, China must do adequate preparations so that the United States cannot quickly and fully realize its ideas.

Opening the “financial war” with the exchange rate has expanded its depth and breadth and influence more than the “trade war” in the past. Among them, the interests of China and the United States are intertwined, and it is very difficult to unilaterally want to completely decouple and avoid negative effects. China must do a good job in the financial sector of the two countries to continue to prepare for the development of China, and strive for a good result. If there is not sufficient preparation, the development of the problem will cause more damage once it exceeds our expectations. We must try our best to prevent the “financial war” from expanding and causing greater harm to our country.

In the 40 years since the reform and opening up, foreign exchange reserves have been a huge wealth accumulated by the people of the whole country through the import and export trade. They are the wealth of the whole society. The foreign exchange reserves also directly affect the issuance and price of the renminbi. Stable and has an important strategic position. At present, this strategic position has been greatly challenged, and the foreign exchange market has become a target of the US “trade war” and even the “financial war.” In the past, China and the United States have carried out extensive and in-depth cooperation and integration in the money market. Although the issue of exchange rate manipulation has also been raised, the United States has never really fully exerted its full pressure on the exchange rate market. From a period of relatively stable cooperation to the present-day suppression period, the position of China’s huge foreign exchange reserve in the eyes of Americans has obviously changed. The exchange rate issue may become an important issue in the geopolitical and state relations between the two countries. The market may become a tool for further pressure on China. At this moment, we must consider the strategic positioning of foreign exchange from national wealth to financial battlefield and become the focus of “financial warfare.”

For a long time, foreign exchange has been an extremely important asset for China. With 40 years of reform and opening up, without a huge surplus and foreign exchange reserves, it is difficult for China to achieve today’s economic development achievements. Without foreign exchange support, the import trade represented by China’s economic development with a large amount of primary product resources and high-end chip products cannot be realized. It can be said that it is the accumulation of a large amount of foreign exchange reserves. China has been able to use the favorable environment of international trade and international financial markets for a long time to maintain a stable and rapid development of the Chinese economy under low inflation and achieve a better economy. Construction results. If we used foreign exchange as an important cornerstone of economic development, then the United States now wants to shake and dig this cornerstone. We must have a clear understanding of the repositioning of the foreign exchange market. Forex, although it is the most important core asset of China’s resident society, the United States may use various means to suppress and contain the Chinese economy in the foreign exchange market in order to achieve the goal of “weakening the opponent and consolidating the hegemonic status”. The problem bears the brunt.

China’s large amount of foreign exchange reserves are denominated in US dollars in the long run and to a considerable extent. The foreign exchange market is in the hands of the United States at the technical level. This situation will have a very negative impact on China. To solve the strategic position of foreign exchange, it is fundamentally to strengthen the development and construction of the local currency. Since the founding of the People’s Republic of China 70 years ago, the renminbi has been operating stably for a long time in the country and will continue to operate. In the future, the international influence and international status of the renminbi will need to be greatly strengthened. We must shift the strategic positioning of foreign exchange reserves from the original “highly reliable core wealth” to “a new focus of financial warfare and even a new battlefield.”

How to protect and effectively allocate China’s foreign exchange reserve resources from the impact of the “financial war” has become the most important issue. At the same time, we must also rethink the position of foreign exchange in the national economy. We should not simply consider it from a good perspective, but also consider the possible bad aspects, that is, the United States may weaken China by making a big fuss in the exchange rate market. Long-term accumulation of financial wealth. China currently reserves a large amount of US dollar wealth. If there are risk events in the future, how to avoid foreign exchange risks requires China to pay close attention to and take a series of effective measures.

In response to the “financial warfare” that the United States is trying to launch, the current countermeasure is to try to avoid more conflicts between the two countries in the foreign exchange market and reduce the adverse impact of exchange rate changes on the economy and trade.

First of all, the flexibility of the exchange rate should be strengthened to make it resilient and fully respond to the suppression of the United States. The implementation of a floating exchange rate and the necessary capital controls must be used by both hands. The United States has identified the normal depreciation of China’s exchange rate market as man-made manipulation, which is obviously wrong. But we will also make the exchange rate management system closer to international conventions and market rules in the future. In the past, some of our management practices have been seen by the International Monetary Fund and the US Treasury. Now, we must maintain the consistency and unity of the external image, maintain the rationality of our policies, and obtain universal moral support and help from other countries. At the same time, we must also prevent the United States from making a big fuss about “exchange rate manipulation” and taking more sanctions against us, especially in the financial sector. Therefore, both means must be used, and to ensure that China can occupy a moral high ground on various measures, so that we have sufficient reasons to refute the US accusation and win more support in the world. For example, on the issue of “exchange rate manipulation,” the IMF does not agree with the US. From this we can still make full use of various conditions to improve our situation.

Secondly, there must be a long-term response to the “exchange rate manipulation accusation”. In the past, the United States accused China of “exchange rate manipulation” only by chance, but the “Sword of Damocles” actually hangs over China for a long time. For example, the United States always lists China as an observer of exchange rate manipulation, and when it needs it, it will be a sword. For this problem, we can’t just regard it as a short-term event again and again. Although historical experience shows that listing China as a “currency manipulator” is a special act of the United States in a specific period of time, it will be adjusted and changed after a period of time. But this incident will happen as a medium- and long-term issue as Sino-US trade frictions escalate. We should try our best to turn this “exchange rate manipulation” accusation into a short-term problem. However, we must also be prepared for perfection. Once the United States puts pressure on China as a medium- and long-term issue, China must have clear measures to combat it.

Third, we must increase the international pricing power of the renminbi. In October 2016, RMB officially joined the SDR. However, compared with other currencies in the SDR, the RMB does not have sufficient internationalization level, and the international pricing power of the RMB should continue to increase and continue to increase. We must continue to enhance the penetration and expansion of the renminbi, which requires joint efforts from all sides. Take more innovative means, be brave in temptation, dare to expand new development space, and constantly improve the international voice of the renminbi.

In response to the suppression and containment of the “financial war” in the United States, we should fundamentally reduce the dependence of economic development on the dollar. At present, a significant problem facing China’s economic development is its excessive dependence on the US dollar. In the early days of reform and opening up, China relied too much on the export economy, and this problem gradually improved. However, the long-term accumulation of foreign exchange reserves and the extensive development of China-US economic and trade cooperation have made China’s economic development too dependent on the US dollar. This has become a catch in the US’s use of the exchange rate market to combat China’s economy. From the perspective of long-term development, We must gradually reduce our dependence on the dollar.

Reducing the dependence of economic development on the US dollar, first, expanding the use of other reserve currencies, but the scope of application of this strategy is very limited. This is because in the world, regardless of trade settlement or reserve investment, the use of other currencies is far less extensive than the US dollar. Although there is a certain amount of operational space, the effect is bound to be limited.

The most fundamental measure is that we must gradually increase the internationalization of the renminbi and increase the use of the renminbi in the commodity market. This is because, in the international market, the important strategic resources of bulk commodities are highly correlated with the development of capital markets. The pricing of bulk commodities is mostly based on the method of “futures price + premiums and discounts”, while the futures market is the capital market. component.

To realize the internationalization of the renminbi, it cannot be simply understood as the distribution and deposit of RMB funds in branches of overseas institutions and Chinese-funded institutions, and more importantly, the opening of renminbi channels in international commodity markets, such as oil and natural gas. Iron ore and some bulk agricultural products, etc., use more renminbi settlements in these markets. After all, many resource-rich countries have a lower degree of internationalization of their local currency, so seizing the opportunity and promoting the internationalization of the renminbi to a greater extent can greatly improve China’s international environment and international status in the commodity market, thus making the renminbi The dependence on the US dollar has been greatly reduced. Therefore, enhancing the role and status of the RMB in the settlement of commodities and international trade is of strategic importance.

In addition, China should also purchase US Treasury bonds as the main carrier of wealth, and consider some feasible new solutions as soon as possible, so that we do not rely too much on the US dollar in this field, of course, this operation will be more difficult. Because the renminbi has a certain distance as a reserve currency, we should work hard in this direction, study and consider it, and take some possible plans as a plan.

All in all, the United States has identified China as a “currency manipulator”. In essence, the United States intends to open a “financial war.” This move undoubtedly poses new challenges for China and puts forward new requirements for our follow-up work. Actively responding to US unilateralism, in addition to reducing economic losses in the short term, it should fundamentally reverse China’s dependence on the US dollar. Although the latter is a long-term process, it must be acted upon immediately so that China will occupy a more active position in the international future, which will also lay a solid foundation for the internationalization of the RMB and help China in the global industrial chain. Build your own supply chain in the system and create a good condition for the development of China’s commodity market.

On August 9th, the International Monetary Fund (IMF) issued China's annual fourth-term consultation report, reaffirming that China's current account surplus fell in 2018, and the RMB exchange rate was basically in line with economic fundamentals. The exchange rate issue has always been the core issue of the financial market. At the third China Finance Forum for 40 people held at the Yichun Forum on August 10, the exchange rate has become a concern of many experts and scholars. Including the 12th CPPCC Vice Chairman, CF40 Standing Council Chairman Chen Yuan, CF40 Academic Committee Chairman, Peking University National Development Research Institute Vice President Huang Yiping, CF40 member, Central Bank International Director Zhu Xi Speaking of the current RMB exchange rate situation. Chen Yuan, vice chairman of the 12th National Committee of the Chinese People's Political Consultative Conference and chairman of the CF40 Standing Committee, delivered a keynote speech on "exchange r...

ate manipulation" and Sino-US currency relations. He pointed out that the United States identified China as a "currency manipulator" and a "trade war" upgrade. The important signs are more global and long-term. From a currency point of view, the ratio between the two currencies will further amplify the shortcomings of the renminbi and the dollar, and challenge the international status of the renminbi. Therefore, the exchange rate issue is only the beginning of a "currency war", and we must have a clear understanding of this. Chen Yuan pointed out that China currently has huge US dollar foreign exchange reserves and more than one trillion US dollars of bonds. From a geopolitical point of view, the United States has always been very vigilant because the US bonds held by China will cause the US financial market to be somewhat restrained by China. Therefore, in the financial market, the United States is not without strategic weakness. However, the opening of the "financial war" with the exchange rate has expanded its depth and breadth and influence more than the "trade war" of the past. Among them, the interests of China and the United States are intertwined, and it is very difficult to unilaterally want to completely decouple and avoid negative effects. China must do a good job in the financial sector of the two countries to continue to prepare for the development of China, and strive for a good result. If there is not sufficient preparation, the development of the problem will cause more damage once it exceeds our expectations. We must try our best to prevent the "financial war" from expanding and causing greater harm to our country. Chen Yuan believes that foreign exchange reserves are a huge asset of China and are vital to the financial market, directly affecting China's currency issuance and the stability of the renminbi. However, at present, foreign exchange has become the target of launching a trade war or financial war in the United States. Therefore, China should rethink the strategic issue of foreign exchange, and must strategically position foreign exchange reserves from the original "highly reliable core wealth" to the "new focus of financial warfare." Even the new battlefield" is converted. How to protect and effectively allocate China's foreign exchange reserve resources from the impact of the "financial war" has become the most important issue. The following is the full text of Chen Yuan’s speech. On August 6, Beijing time, the US Treasury issued a statement stating China as a "currency manipulator", indicating that the Sino-US situation has undergone new changes. Last year, when I discussed the Sino-US trade war, I pointed out that it will take time for the "trade war" to turn into a "financial war." The current US behavior is the embodiment of the ultimate pressure. The United States intends to make China's biggest concessions in economic and trade negotiations by creating high pressure. Of course, we should also look at the unilateralism of the US government with a calm attitude. The exchange rate issue is one of the core issues in financial markets. The exchange rate policy has a certain impact on the circulation of RMB, inflation and even economic growth. Therefore, for the money market, the exchange rate issue is a more fundamental and important issue. It can be said that the exchange rate policy directly affects the relationship between China and the global monetary system, especially the relationship between China and the US currency system, the world's largest economy. Therefore, the exchange rate is a measurable and tangible currency-price relationship that is closely related to the country, the enterprise and even the individual. It is a quantifiable key indicator. The special status of the exchange rate makes it always at the top of the global trade chain and financial chain. Therefore, the United States has identified China as a "currency manipulator". In fact, it wants to harass China's financial market and undermine China's economic order through the implementation of hegemonic authority. In the game process of Sino-US trade negotiations, it can play the role of "making chaos and fighting opponents." The United States has listed China as a "currency manipulator" and is an important action for the United States to upgrade the "trade war" to a "financial war." It can be seen as a new sign of a stage. Although the launch of the "financial war" may have been in the US's layout, the introduction of specific actions is obviously of symbolic significance. An important question at present is what methods and means will the US adopt after raising the exchange rate issue? If the exchange rate issue continues, how big is its scope of influence and depth of influence? I believe that if the United States wants to expand and deepen the exchange rate issue, and there are still many constraints, it will also have many problems, which will not only affect China, but also affect the United States. The implementation of the exchange rate issue on China's financial and economic markets has a high cost and cost. It can be seen that such a key indicator of the exchange rate will actually affect the economic relationship between the entire financial system and the country. All the trade relations and economic relations between the two countries will be affected. Take Japan as an example. After the "Plaza Agreement", the yen was forced to appreciate, affecting the re-layout of the entire Japanese economy. A large amount of capital has been invested in the real estate market and has created a bubble that has hit the Japanese economy. At the same time, some industrial capitals are looking for new investment space abroad, which has promoted Japan's overseas investment and internationalization, which has brought Japan's economic development to a new level. This shows that the consequences of the exchange rate issue are multifaceted. From the experience of Japan, the negative impacts include the real estate bubble and the financial bubble, but the positive impact is to force Japanese companies to find new investment footholds in overseas markets. Therefore, the development prospects of the exchange rate issue are full of uncertainty. It is a very crucial issue for China to learn from the historical experience of other countries and seriously consider how to respond appropriately to the exchange rate issue. The United States has identified China as a "currency manipulator" and is an important symbol of the escalation of the "trade war". It is more global and long-term. From a currency point of view, the ratio between the two currencies will further amplify the shortcomings of the renminbi and the dollar, and challenge the international status of the renminbi. Therefore, the exchange rate issue is only the beginning of a "currency war", and we must have a clear understanding of this. Compared with the US dollar, the shortcomings of the renminbi are still very obvious. At present, the renminbi is still a currency dominated by the domestic economy, and the internationalization of the renminbi is still in its infancy. Although the renminbi has achieved important results in joining the SDR, the proportion of renminbi used in investment and settlement is still relatively small worldwide. In this case, we should try to avoid a positive conflict with the US dollar. In terms of the current ability of the RMB, a positive confrontation with the US dollar will not be conducive to the current position. Although China has made great achievements in the domestic monetary and financial markets, in the international market, the United States has long dominated the world after World War II, and the US dollar has naturally become a currency with a "hegemonic status." We should not use our long-term strengths to combat our relative shortcomings. It is necessary to avoid the "financial warfare" to be carried out on a larger scale, paying particular attention to the negative impact of the exchange rate issue on China. In terms of intentions, the United States is only asking for the appreciation of the RMB exchange rate to suppress China’s exports. After the "breaking of the RMB" against the US dollar, it has indeed improved the environment for domestic enterprises to export in the short term, but this is obviously not in the interest of the United States. Under this circumstance, the United States may take further measures in other investment and financial inter-bank relations. In the face of these potential problems, we must be highly vigilant and fully prepared. By suppressing China's financial market and curbing the Chinese economy through the exchange rate, the United States certainly hopes to gain more benefits. To a large extent, the United States wants to decouple in Sino-US relations. However, in the exchange rate market and the money market, the decoupling between China and the United States is not easy. China currently has huge US dollar foreign exchange reserves and more than one trillion US dollars of bonds. From a geopolitical point of view, the United States has always been very vigilant because the US bonds held by China will cause the US financial market to be somewhat restrained by China. Therefore, in the financial market, the United States is not without strategic weakness. However, the fact that we have mastered only has a partial impact on the United States, and it does not constitute a strategic height to deter the US from the overall situation, but it can still play a certain role. Therefore, the decoupling of financial markets between the two countries or the decoupling of the foreign exchange market is a difficult matter. Since the United States wants to suppress China in this respect, China must do adequate preparations so that the United States cannot quickly and fully realize its ideas. Opening the "financial war" with the exchange rate has expanded its depth and breadth and influence more than the "trade war" in the past. Among them, the interests of China and the United States are intertwined, and it is very difficult to unilaterally want to completely decouple and avoid negative effects. China must do a good job in the financial sector of the two countries to continue to prepare for the development of China, and strive for a good result. If there is not sufficient preparation, the development of the problem will cause more damage once it exceeds our expectations. We must try our best to prevent the "financial war" from expanding and causing greater harm to our country. In the 40 years since the reform and opening up, foreign exchange reserves have been a huge wealth accumulated by the people of the whole country through the import and export trade. They are the wealth of the whole society. The foreign exchange reserves also directly affect the issuance and price of the renminbi. Stable and has an important strategic position. At present, this strategic position has been greatly challenged, and the foreign exchange market has become a target of the US "trade war" and even the "financial war." In the past, China and the United States have carried out extensive and in-depth cooperation and integration in the money market. Although the issue of exchange rate manipulation has also been raised, the United States has never really fully exerted its full pressure on the exchange rate market. From a period of relatively stable cooperation to the present-day suppression period, the position of China’s huge foreign exchange reserve in the eyes of Americans has obviously changed. The exchange rate issue may become an important issue in the geopolitical and state relations between the two countries. The market may become a tool for further pressure on China. At this moment, we must consider the strategic positioning of foreign exchange from national wealth to financial battlefield and become the focus of "financial warfare." For a long time, foreign exchange has been an extremely important asset for China. With 40 years of reform and opening up, without a huge surplus and foreign exchange reserves, it is difficult for China to achieve today's economic development achievements. Without foreign exchange support, the import trade represented by China's economic development with a large amount of primary product resources and high-end chip products cannot be realized. It can be said that it is the accumulation of a large amount of foreign exchange reserves. China has been able to use the favorable environment of international trade and international financial markets for a long time to maintain a stable and rapid development of the Chinese economy under low inflation and achieve a better economy. Construction results. If we used foreign exchange as an important cornerstone of economic development, then the United States now wants to shake and dig this cornerstone. We must have a clear understanding of the repositioning of the foreign exchange market. Forex, although it is the most important core asset of China's resident society, the United States may use various means to suppress and contain the Chinese economy in the foreign exchange market in order to achieve the goal of “weakening the opponent and consolidating the hegemonic status”. The problem bears the brunt. China's large amount of foreign exchange reserves are denominated in US dollars in the long run and to a considerable extent. The foreign exchange market is in the hands of the United States at the technical level. This situation will have a very negative impact on China. To solve the strategic position of foreign exchange, it is fundamentally to strengthen the development and construction of the local currency. Since the founding of the People's Republic of China 70 years ago, the renminbi has been operating stably for a long time in the country and will continue to operate. In the future, the international influence and international status of the renminbi will need to be greatly strengthened. We must shift the strategic positioning of foreign exchange reserves from the original "highly reliable core wealth" to "a new focus of financial warfare and even a new battlefield." How to protect and effectively allocate China's foreign exchange reserve resources from the impact of the "financial war" has become the most important issue. At the same time, we must also rethink the position of foreign exchange in the national economy. We should not simply consider it from a good perspective, but also consider the possible bad aspects, that is, the United States may weaken China by making a big fuss in the exchange rate market. Long-term accumulation of financial wealth. China currently reserves a large amount of US dollar wealth. If there are risk events in the future, how to avoid foreign exchange risks requires China to pay close attention to and take a series of effective measures. In response to the "financial warfare" that the United States is trying to launch, the current countermeasure is to try to avoid more conflicts between the two countries in the foreign exchange market and reduce the adverse impact of exchange rate changes on the economy and trade. First of all, the flexibility of the exchange rate should be strengthened to make it resilient and fully respond to the suppression of the United States. The implementation of a floating exchange rate and the necessary capital controls must be used by both hands. The United States has identified the normal depreciation of China’s exchange rate market as man-made manipulation, which is obviously wrong. But we will also make the exchange rate management system closer to international conventions and market rules in the future. In the past, some of our management practices have been seen by the International Monetary Fund and the US Treasury. Now, we must maintain the consistency and unity of the external image, maintain the rationality of our policies, and obtain universal moral support and help from other countries. At the same time, we must also prevent the United States from making a big fuss about "exchange rate manipulation" and taking more sanctions against us, especially in the financial sector. Therefore, both means must be used, and to ensure that China can occupy a moral high ground on various measures, so that we have sufficient reasons to refute the US accusation and win more support in the world. For example, on the issue of "exchange rate manipulation," the IMF does not agree with the US. From this we can still make full use of various conditions to improve our situation. Secondly, there must be a long-term response to the "exchange rate manipulation accusation". In the past, the United States accused China of "exchange rate manipulation" only by chance, but the "Sword of Damocles" actually hangs over China for a long time. For example, the United States always lists China as an observer of exchange rate manipulation, and when it needs it, it will be a sword. For this problem, we can't just regard it as a short-term event again and again. Although historical experience shows that listing China as a “currency manipulator” is a special act of the United States in a specific period of time, it will be adjusted and changed after a period of time. But this incident will happen as a medium- and long-term issue as Sino-US trade frictions escalate. We should try our best to turn this "exchange rate manipulation" accusation into a short-term problem. However, we must also be prepared for perfection. Once the United States puts pressure on China as a medium- and long-term issue, China must have clear measures to combat it. Third, we must increase the international pricing power of the renminbi. In October 2016, RMB officially joined the SDR. However, compared with other currencies in the SDR, the RMB does not have sufficient internationalization level, and the international pricing power of the RMB should continue to increase and continue to increase. We must continue to enhance the penetration and expansion of the renminbi, which requires joint efforts from all sides. Take more innovative means, be brave in temptation, dare to expand new development space, and constantly improve the international voice of the renminbi. In response to the suppression and containment of the "financial war" in the United States, we should fundamentally reduce the dependence of economic development on the dollar. At present, a significant problem facing China's economic development is its excessive dependence on the US dollar. In the early days of reform and opening up, China relied too much on the export economy, and this problem gradually improved. However, the long-term accumulation of foreign exchange reserves and the extensive development of China-US economic and trade cooperation have made China's economic development too dependent on the US dollar. This has become a catch in the US's use of the exchange rate market to combat China's economy. From the perspective of long-term development, We must gradually reduce our dependence on the dollar. Reducing the dependence of economic development on the US dollar, first, expanding the use of other reserve currencies, but the scope of application of this strategy is very limited. This is because in the world, regardless of trade settlement or reserve investment, the use of other currencies is far less extensive than the US dollar. Although there is a certain amount of operational space, the effect is bound to be limited. The most fundamental measure is that we must gradually increase the internationalization of the renminbi and increase the use of the renminbi in the commodity market. This is because, in the international market, the important strategic resources of bulk commodities are highly correlated with the development of capital markets. The pricing of bulk commodities is mostly based on the method of “futures price + premiums and discounts”, while the futures market is the capital market. component. To realize the internationalization of the renminbi, it cannot be simply understood as the distribution and deposit of RMB funds in branches of overseas institutions and Chinese-funded institutions, and more importantly, the opening of renminbi channels in international commodity markets, such as oil and natural gas. Iron ore and some bulk agricultural products, etc., use more renminbi settlements in these markets. After all, many resource-rich countries have a lower degree of internationalization of their local currency, so seizing the opportunity and promoting the internationalization of the renminbi to a greater extent can greatly improve China’s international environment and international status in the commodity market, thus making the renminbi The dependence on the US dollar has been greatly reduced. Therefore, enhancing the role and status of the RMB in the settlement of commodities and international trade is of strategic importance. In addition, China should also purchase US Treasury bonds as the main carrier of wealth, and consider some feasible new solutions as soon as possible, so that we do not rely too much on the US dollar in this field, of course, this operation will be more difficult. Because the renminbi has a certain distance as a reserve currency, we should work hard in this direction, study and consider it, and take some possible plans as a plan. All in all, the United States has identified China as a "currency manipulator". In essence, the United States intends to open a "financial war." This move undoubtedly poses new challenges for China and puts forward new requirements for our follow-up work. Actively responding to US unilateralism, in addition to reducing economic losses in the short term, it should fundamentally reverse China's dependence on the US dollar. Although the latter is a long-term process, it must be acted upon immediately so that China will occupy a more active position in the international future, which will also lay a solid foundation for the internationalization of the RMB and help China in the global industrial chain. Build your own supply chain in the system and create a good condition for the development of China's commodity market.