The RMB settlements for cross-border trade and the construction of Hong Kong's offshore RMB markets have made significant achievements.However,the RMB settlements are highly unbalanced in export and import,which will result in further accumulation of China's foreign exchange reserves.The essence of unbalanced RMB settlements is the swap of China's high yielding RMB assets for external low yielding foreign currency assets,which will cause huge welfare losses.The development of Hong Kong's offshore RMB market is restricted by the lack of investment channels,but the new flow-back mechanisms committed by the Chinese government will make some change.Nevertheless,the Chinese government should proceed with flow-back mechanisms very carefully to avoid the inflow of speculative funds.Moreover,Chinese government should speed up the market-oriented reform of interest rate and exchange rate mechanisms.Finally,the Chinese government should re-think its currency strategy to promote RMB internationalization. <<