Explore The Analysis Of China's Foreign Exchange Reserves

In recent years, as the economy of China is developing rapidly,China has been to be the focus of attention in the global economy.According to the statistics of the People's Bank of China in April 14,2011,the data reveals,at the end of Mar,2011, China's foreign exchange reserves amounted to$ 3,044,700,000,000.Faced with such a huge amount of foreign exchange reserves,inevitably,more and more people will discuss the quantity of foreign exchange reserves.In this paper, at the base of the research about foreign exchange reserves at home and abroad, with China's actual situation,we have choosed the Agarwal model that be fit for developing countries.and also used econometrics analysis,to analyze China's foreign exchange reserves in recent years.The centerpiece of this paper is to use model to analyze the scale of China's foreign exchange reserves.The main content includes following three parts:(1) using the improved Agarwal model, figure out an appropriate scale interval of China's foreign exchange reserves in recent years, and compare with the actual total amount of foreign exchange reserves, and,we come to a conclusion that China's foreign exchange has been superfluous seriously. (2) using econometric analysis to explore the long-term equilibrium relationship between foreign exchange reserves and the factors that impact the reserves,and we have obtained that foreign exchange reserves has been existed a long-run equilibrium cointegration relationship between exports, imports, foreign debt, foreign direct investment, broad money supply as well as international payments.And then establish the error correction model, in order to draw the mechanism that short-term deviation been corrected to the long-run equilibrium. (3) analyse the reasons for the rapid development of foreign exchange reserves,and the effect of the Chinese economy by high foreign exchange reserves. And according to previous research make recommendations to improve the foreign exchange reserves.