China's role in world monetary system positive

II. The special position of China

China is the biggest net savings provider in the last five years and the second largest economy in the world in terms of GDP as calculated in the current exchange rate. If in terms of the PPP, it will be doubled. The trade scale of China accounts for 10 percent of that in the world. Oversea Direct Investment from China last year amounted to USD 56.5 billion, which is No. 5 in the whole world and No. 1 among developing countries. The stock of total investment in foreign markets is No.15. China is a big player in investment and trade, but it is still a developing country.

In the monetary field, China is a prominent player too. As I mentioned, China is the largest net savings provider or capital exporter. Roughly speaking, China had total exports of more than 2 trillion U.S. dollars in the past five years. China's International Investment Position is more than 4 trillion U.S. dollars now. The number for the United States is twice as much, but China is growing very fast.

This phenomenon has never been seen before. As in history, capital exporters were often very advanced countries. For example, the United Kingdom was the major capital exporter in the 19th century, and for most of the 20th century, it was the United States. In 1985, the United States became a net debtor, while Japan, the Four Asian Tigers, and Germany became the major capital exporters. We began to see some differences from then on.

China is very special because it is still a developing country with a per capita GDP of 4,000 USD, and in PPP of 8,000 USD, but China has become the largest capital exporter. It’s very strange. China’s economy, savings and investment are big in scale and in substance. The technology in some areas is also developing very fast.

Talking about savings and investment, in the coming five years, there will be a smaller surplus in current accounts, about 200 billion U.S. dollars to 300 billion U.S. dollars per year, and 1 trillion U.S. dollars or 1.5 trillion U.S. dollars in total. That means China will still quite likely be the largest capital exporter.

It is a big challenge or pressure for China because we need to think all the time about how to invest with so much money. People say it is a big risk to have too much money when you face a wildly fluctuating market and have very limited options. It is also a big challenge and a big opportunity to the world with so much capital outflow.