Research On The Moderate Scale Of International Exchange Reserves In China

FER is a key index to inspect international economy for a country or district. Foreign exchange reserves is the core of the international monetary system and of vital importance in the area of international financial research. Since the reform on foreign exchange regime in 1994, the foreign exchange reserves of China have kept a fast growth, and by the end of 2005, the foreign exchange reserves have reached $818.9 billion, which have exceeded the reserves of Japan of the same times and ranked the top one in the world. By the end of first quarter 2007 it has amounted to $1202.03 billion. Such substantive foreign exchange reserves have become the focus of home and abroad. And have been an important cause for RMB appreciation required by the USA, Japan and other west countries. Is such large scale of foreign exchange reserves moderate to the economic development of China? What effect does it can make on China's economy? The paper is focus on the question. The article has conducted the research on the moderate scale and management of foreign exchange reserves of China.Not only the qualitative analysis but also quantitative analysis is used in the thesis. This thesis starts with the deep research about the current situation of our country' FER, and tries to find out the main factors that lead to the rapid growth of FER. Based of objective evaluation and reference from the predecessor, the article use the improved Agarwal model and use Co-integration Test to study the moderate scale of Chinese foreign exchange reserve, and the conclusion is that the scale of Chinese foreign exchange reserves at present is more than the moderate one. On the empirical analysis, the article discusses the positive and negative effect that excessive foreign exchange reserve brings on the economy development of China. In the view of the current foreign exchange reserve scale being much larger than the moderate one, the article suggests some practical and feasible policies on the scale and structure management of foreign exchange reserves. And the author proposes some own tentative plans and ideas on the currency types and the classification and management of property in the structure management.