Studies On The Optimum Scale Of Chinese Foreign Exchange Reserve

Since the reform and opening up of China, with the growth of Chinese economy and the development of external economic exchange, the scale of Chinese foreign exchange reserve experiences rapid increase from 0.84 billion dollars in 1979 to 609.93 billion dollars in 2004 with the annual increase rate of 30.1%. Although it can bring some positive effects to the economy, the substantial foreign exchange reserve has brought many negative influences to Chinese economic development. Accordingly, studies on the optimum scale of Chinese foreign exchange reserve and putting forward relevant propositions have become the hot issues in the research on Chinese macro economy.This thesis synthesizes the research results about the theoretical analyses of foreign exchange reserve optimum scale, and analyzes the optimum scale of Chinese foreign exchange reserve through several positive methods considering the situation of China. The thesis then, based on the analysis result, analyzes the reason and economic influence of Chinese excessive reserve scale, and puts forward relevant policy propositions about Chinese reserve scale management.The thesis firstly summarizes international reserve and foreign exchange reserve, and then analyzes the meanings of foreign exchange reserve optimum scale from several points of view, in which target area of optimum scale and the relationship between optimum scale and optimal scale are introduced.The thesis in chapter 2 reviews the theoretical analyses of foreign exchange reserve optimum scale. The chapter first analyzes the supply factors and the demand factors that influence the foreign exchange reserve, and then emphatically introduces the analysis methods of foreign exchange reserve optimum scale since 1960s, which include proportion analysis, demand function analysis, cost and revenue analysis, factor analysis and other analysis methods. These theoretical analyses have important reference value to the studies on the optimum scale of Chinese foreign exchange reserve.Combining the actual situation of Chinese foreign exchange reserve, the thesis in chapter 3 analyzes the optimum scale of Chinese foreign exchange reserve. The chapter firstly summarizes the historical course and present status of Chinese foreign exchange reserve, and then analyzes the optimum scale of Chinese reserve with 3 methods: index analysis, econometric analysis and fixed value analysis. Index analyses include those indexes that are directly and indirectly related with foreign exchange reserve. Econometric analysis forecasts the optimum scale of Chinese reserve through suitable econometric model. Fixed value analysis calculates the optimum scale of Chinese reserve through Agarwal model and demand factors. According to analysis results of the three methods, the thesis makes the conclusion that the scale of Chinese foreign exchange reserve in recent years is excessive. The thesis finally in chapter 4 analyzes the reason and the economic influence of the excessive scale of Chinese foreign exchange reserve, and then puts forward the policy propositions about scale management of Chinese foreign exchange reserve. The chapter first analyzes the reason from 3 aspects: direct reason, institutional reason and essential reason, and then analyzes the economic influence of excessive scale in which negative influences are emphatically introduced. The chapter lastly puts forward the basic ideas of reserve management and the policy propositions of scale management of Chinese foreign exchange reserve. The thesis thinks that the propositions are helpful for keeping Chinese reserve scale optimum.