THREAD: #China’s huge amount of forex reserves has been a precious asset to Chinese over the past 4 decades, but as the foreign exchange market has become a target of #tradewar, and possibly a “financial war”, China must seek a new strategic meaning for it, said Chen Yuan: 1/5
One reason is that the meaning of China’s huge forex reserves has changed to the #American as China-US relationship has become more complicated than before when the two used to have more cooperation and integration in the money market. 2/5
At this moment, China must reconsider the strategic meaning of its forex reserves which, for instance, could be a “financial battlefield” or even the focus of a
"financial war": cf40.org.cn/uploads/201909… 3/5
To address the strategic positioning of forex, China should strengthen the development of RMB. During this process China should take into account all potential scenarios, including one in which the US might take all measures to weaken this financial wealth. 4/5
The solution to mitigate negative impact resulted from a US-fueled war is to reduce dependence on US dollar. To this end,one option is to expand the use of other reserve currencies but fundamentally it’s the internalization of #RMB and its more presence in commodities market. 5/5
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