Moderate Scale Of China's Foreign Exchange Reserves

In recent years, the high level of foreign exchange reserves has caused widespreadconcern in society, in addition to the State Administration of Foreign Exchange believesthat China’s foreign exchange reserves is no excess, and it’s in line with China’s nationalconditions and needs, caused great controversy. China’s temperate foreign exchangereserves has become an important topic of academic research.The paper first comprehensive literature at home and abroad on the temperate scale offoreign exchange reserves in recent years.In China, the scholars held the views includingexcessive,inadequate and temperate. This paper analyzes the status quo of China’s foreignexchange reserves and the causes, weigh the pros and cons of high foreign exchangereserves, more harm than good. Chapter IV use empirical analysis to calculate thetemperate scale of foreign exchange reserves in recent years, mainly used is proportionalanalysis and cost-benefit analysis. In proportional analysis, we selected imports, foreigndebts and GDP three indicators for analysis;In cost-benefit analysis, we mainly use themodel of Heller and Agarwal. Agarwal model suits the national conditions of developingcountries, the we corrected and simplify Agarwal model, imported data for China,estimated China’s current foreign exchange reserves. The conclusion is excessive. Finally,we put forward policy and recommendations that how to strengthen foreign exchangereserves management.