Under the background of international economic imbalances, China's balance of payments has continued to double surplus in recent years, and its foreign exchange reserves have been rising. Under the current system of foreign exchange and sales, the central bank has released the basic currency to hedge, and the money supply has increased. In addition, after the reform of the RMB exchange rate mechanism, to maintain the basic stability of the exchange rate, the central bank needs to invest RMB in order to buy foreign exchange, while the basic money supply expands the broad money supply by multiplier effect, which leads to excess liquidity in the country.

Since the reform and opening up, the scale of our international balance of payments has been expanding.

Before 1993, the surplus of current account, capital and financial items alternated. After 1994, the "double surplus" pattern of balance of payments was basically formed.

After 2001, the balance of payments surplus continued to grow.

From 2001 to 2005, the current account surplus amounted to 328 billion 200 million US dollars, and the surplus of capital and financial items totaled US $293 billion 500 million.

The sustained double balance of payments has promoted the rapid growth of the country's foreign exchange reserves.

By the end of February 2006, China has become the world's first foreign exchange reserve country.

By the end of 2006, the balance of the country's foreign exchange reserves rose to 10663 billion US dollars, an increase of 5.4 times compared with the end of 2000.

At the end of 3 this year, the scale of China's foreign exchange reserves has reached 12020 billion US dollars.