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Implications of China s foreign exchange reserves for the global economy Andong Zhu Tsinghua University New Delhi, India 2008.1.

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Presentation on theme: "Implications of China s foreign exchange reserves for the global economy Andong Zhu Tsinghua University New Delhi, India 2008.1."— Presentation transcript:

1 Implications of China s foreign exchange reserves for the global economy Andong Zhu Tsinghua University New Delhi, India

2 Outline The Accumulation of Foreign Reserves The Accumulation of Foreign Reserves The Sources of Foreign Reserves The Sources of Foreign Reserves The Costs of Holding Huge Amount of Forex The Costs of Holding Huge Amount of Forex What Can We Do with the Foreign Reserves What Can We Do with the Foreign Reserves Implications of China s foreign exchange reserves for the global economy Implications of China s foreign exchange reserves for the global economy

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5 The Rapid Increase of Forex MonthAmountMonthAmount

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8 The Costs of Holding Huge Amount of Forex The Loss due to depreciation of USD The Loss due to depreciation of USD The Colonization of the Chinese Economy The Colonization of the Chinese Economy The Uneven rate of return The Uneven rate of return …… ……

9 Share in Industry Output by Ownership (%)

10 Foreign Capital s Share in Different Industries in China:2005

11 Share of Different Ownership in Different Industries in China:2005

12 The Shanghai Stock Market Composite Index:

13 Take away Profits, Leave GDP and … Pollution

14 Pollution in the World:1999

15 The Uneven rate of return Foreign investment in China: 22% Foreign investment in China: 22% US Treasury Bond: around 5% US Treasury Bond: around 5%

16 What Can We Do with the Foreign Reserves Invest Abroad Invest Abroad Lending Abroad Lending Abroad …… ……

17 Implications of China s foreign exchange reserves for the global economy For developing Countries: For developing Countries: Another source of Investment fund; Another source of Investment fund; Another source of borrowing Another source of borrowing with a more equal relationship with a more equal relationship

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19 Implications of China s foreign exchange reserves for the global economy For developed Countries: For developed Countries: Another source of Investment fund; Another source of Investment fund; Another source of borrowing Another source of borrowing A competing lender A competing lender A competing investor A competing investor

20 Implications of China s foreign exchange reserves for the global economy For the Global Economy: For the Global Economy: Strengthen the bargaining power of the developing countries?! Strengthen the bargaining power of the developing countries?!


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