Are foreign exchange reserves sufficient?

If the RMB continues to open up and internationalize in accordance with our established strategy, maintaining foreign exchange reserves above 2.5 trillion is a necessary prerequisite. If it falls below 3 trillion, it will inevitably affect our opening-up process, because once the capital account is liberalized, a large amount of RMB wealth will flow out, and the 500 billion foreign exchange reserves may be wiped out in an instant. Someone has done some calculations and found that 1 trillion U.S. dollars in foreign exchange reserves is equivalent to 6.6 trillion RMB. Calculated based on 5 million houses, that is 1.32 million houses. Will another 3 million people want to sell their houses and immigrate? Woolen cloth? This is very possible, at least many people in Beijing, Shanghai and Shenzhen will probably do this.

Therefore, time does not wait, and domestic asset bubbles must be brought down before foreign exchange reserves drop to the warning line. Otherwise, the pressure on foreign exchange reserves will be considerable. If a large amount of capital flows out, it will inevitably cause the exchange rate to fall and assets to collapse. By then, none of the exchange rate, housing prices, and foreign exchange reserves can be maintained. It will also affect our entire internationalization process. In fact, the pilot project of QDII2, which was originally promised, has been forced to terminate. The main reason is that the gap between domestic and foreign housing prices is too large. This is indeed a tinderbox.