The Research On The Chinese Foreign Exchange Reserve Management And The Strategic Value Of Oil

Since the reform of exchange rate system in 1994, Chinese foreign exchange reserve is growing rapidly. By the end of 2008, Chinese foreign exchange reserve reached 1.95 trillion U.S. dollars. Large-scale foreign exchange reserve has influenced China on two aspects.On one hand,it has accomplished it's own task,such as the need for trading and interfering,in the same time it has brought some benefits for our country, such as the increase of foreign investment, the stability of finance market, and the boost of international credit. But on the other hand, it has led to the problems of excess liquidity capacity, insufficient degrees of freedom of monetary policy, the increase pressure of RMB appreciation and facing more difficulties of the target to Hedge the foreign exchange reserve. In fact, a high level of foreign exchange reserve means to give up the opportunity to use this part of the foreign exchange reserve to increase imports. And more imports may increase domestic economic growth, consumption and increase domestic employment and national income finally. So the net opportunity cost is too high. At present, the structure of Chinese foreign exchange reserve is relative singleness and the management and operation mode is lagging behind relatively. It can't meet the size and trend of rapid growth of large-scale foreign exchange reserve. And, the series of resulting negative factors is bound to the health and stability of the economy development. So, how to manage the large-scale foreign exchange reserve, to achieve a wide range of operations taking into account the safety, preservation and profitability objectives in order to promote the healthy, sustained and steady increase of Chinese economic has become a major currently issue. For this issue, many domestic scholars have done researches.On the problem of scale,the major point of view is that large-scale reserve is not neccesary. So there comes about the concern for the problem of structure management,especially the invest management. The common conclusion is that the present investment,hloding American bonds,is inefficient.We should transfer to some other assets,partly at least,Such as investing on some strategic resources. However, these researches had just discussed about the theoretical framework and some suggestion, but did not provide the data and empirical evidences in support of the proposal given. This paper is focusing on the invest management of exchange reserve,and choosing oil as the major reaserch subject, to discuss its significance for Chinese economic development, in the big background of the shortages of the world's energy and limited capacity of the rise in world oil market but the increasing competition in the market and in the small background of the Chinese industrial upgrading and transformation of economic growth require a long time.On the micro aspect, we discuss whether the reward of investment in oil is higher than the book value of the long-term investment in U.S. Treasury bonds. On the basis of previous studies, this paper not only from theoretical point of view, but also attempt to combine with theory to use an econometric model of empirical research in the strategic value of the investment of oil. Specifically, we combined with historical date and used VAR model to test and verify the investment in the oil is better than investment in U.S. Treasury bonds using the comparative analysis method. At last, this paper makes the conclusion to support making use of the long-term strategic Chinese foreign exchange reserve in the long-term strategic value investment of oil.