Research For The Factors Of China’s Foreign Exchange Reserves Based On Principal Component Analysis

Studies on the factors of foreign exchange reserves have largely caused the attention of Chinese scholars, with the steady growth of China’s foreign exchange reserves. Yet the impact of every economic factor on China’s foreign exchange reserves has a different conclusion. This article start from the do-mestic economic development and the change of the international balance of payments, our country’s economy system three aspects and based on economic data from the year of1994to2012,since the year of1994,our country turned on the China’s foreign exchange written guarantee system and exchange rate system reform. At the same time this article selected nine difference influence index. They are gross domestic product (GDP), gap between imports and exports, foreign direct investment in the balance(FDI), outstanding external debt, the broad money supply, the dollar annual average rate for against the RMB, the size of the population in our country, the total export-import volume and the securities investment difference. This article used the principal compo-nent analysis (PCA), and established the standardized regression model among the standardized foreign exchange reserves and the upper nine standardized independent variables. Through the analysis we found that China’s foreign ex-change reserve growth is the outcome of the combined action of many reasons and the system maybe the deep reason for the increase in China’s foreign ex-change reserves. In addition, we found that exchange rate has a reverse impact on China’s foreign exchange reserves growth, all other factors has a positive role in promoting the growth of Chinese foreign exchange reserves. And the gap between imports and exports, population scale, the securities investment difference has a weak effect on the China’s foreign exchange reserves growth...