The Moderate Scale Of Chinese Gold Reserve

China has appeared the balance of payments surplus for several years, as well as the American quantitative easing policy have resulted in excess global liquidity, that make China’ s foreign exchange reserves continued to grow rapidly, and become the largest foreign exchange reserves country of the world. By the end of2011, china’s foreign exchange reserves has reached3.1811trillion U.S. dollars. Sufficient international reserves can maintain a government’s external credit, and can reflect the solvency of the government better, but the excessive foreign exchange reserves will lead to higher opportunity costs and downward pressure on exchange rate changes. Currently, the dollars continuous to depreciate, but the dollar reserves in China’ s international reserves accounted for too large, so that a single reserve structure will face serious risk of shrinking China’s international reserves.The article first analyzes the change of the gold’s status in the international reserves along with the changes of international monetary system, as well as gold’s advantages and deficiencies as an international reserve; and analyze the current situation of the scale of China’s gold reserves and its international comparison; then use the Macovei Heights portfolio Theory, Heller-Knight model and the Dooley model integrated to calculate a reasonable proportion of the gold reserves in China’s international reserves, obtained the proportion of China’s gold reserves in total international reserves should be between3%-9%;and subsequently investigate the practical significance of the increase in gold reserves, its meaning mainly reflect on reducing the exchange rate risk of foreign currency reserve assets, and easing the excess liquidity situation, and helping the RMB become the international currency, improving the creditworthiness of a country, preventing the financial security; then discusses the China’s diversified path on the modest scale of the gold reserves.