— An exclusive interview with Li Hongyan, director general of the Central Foreign Exchange Business Center of the State Administration of

China Forex: What progress was made in the management of China's foreign exchange reserves in 2017?

Li Hongyan: At the end of 2017, China's foreign exchange reserves stood at US$3.1399 trillion, up US$129.4 billion or 4.3%over a year earlier. Over the course of the year, foreign exchange reserves climbed every month year on year after January's decline to US$2.9982 trillion. In 2017, China's overall macroeconomic performance remained stable as a whole and that helped create more balanced cross-border capital flows. That allowed the steady improvement in the nation's foreign exchange reserves.

The year was an important one for the implementation of the 13th Five-Year Plan and a deepening of supply-side structural reforms. Facing the complicated reform tasks and the complex economic and financial situation both at home and abroad,under the correct leadership of the Communist Party of China's Central Committee and the State Council, the Investment Center of State Administration of Foreign Exchange pushed ahead with policies that embraced the spirit of the 19th National Congress of the Communist Party, the Central Economic Work Conference and the National Financial Work Conference. It closely followed the guidelines of serving the real economy, preventing and controlling financial risks, deepening the key tasks of financial reform, steadily promoting all aspects of operation and management, guaranteeing the safety, liquidity and appreciation of assets, and making new and important contributions to serving the national development strategy and ensuring economic and financial security.

China Forex: What is the plan for managing foreign exchange reserves in 2018?

Li Hongyan: 2018 marks the first year of implementing the spirit of the Communist Party's 19th National Congress and the 40th anniversary of the reform and opening up program. This is a crucial year for building a prosperous society and implementing the 13th Five-Year Plan. The task ahead of us is an arduous one and our responsibilities are great.

The Investment Center of the State Administration of Foreign Exchange will continue to follow the spirit of the Communist Party's 19th National Congress,the Central Economic Work Conference and the National Financial Work Conference.It will focus on the principle of grasping the key points of these meetings and making up for shortcomings and weaknesses, while vigorously strengthening capacity building in the management of foreign exchange reserves. This will be aimed at serving the real economy more effectively and bolstering the new pattern of China's opening up to the outside world.In terms of specific work,the center will continue to strengthen the coordination and cooperation of the management of foreign exchange reserves through monetary policy, exchange rate policy and cross-border capital flow policy. It will also closely follow the changes in the international and domestic economic and financial situation, further optimize the currency and asset structure of the nation's foreign exchange reserves and continue to enhance investment capacity building.

Li Hongyan, director general of the Central Foreign Exchange Business Center

The center will also focus its attention on construction linked to the Belt and Road Initiative (a key regional trade and infrastructure development program), continued diversification of its resources, the meeting of all responsibilities in strengthened governance of its equity investment agencies and the serving of national objectives. It will also seek to improve its risk management and internal control framework to strengthen forwardlooking analysis and early warning mechanisms for major risk events. It will also enhance operational efficiency, strengthen information construction and build a new generation of core business systems and world-class operating system. Under the overall leadership of the Communist Party, the center will improve the system and mechanisms of its foreign exchange reserve management. It will cultivate a team of highly qualified professionals with excellent political skills, a strong work style and good business practices.