The Study Of The Moderate Scale Of The Chinese Foreign Exchange Reserves

Under the opening economy condition, the foreign exchange reserve is the important index to illustrate the foreign economical relations of one country and displays the macroscopic economical movement. To adjust the foreign exchange reserve is the important method to regulate the macroscopic economy. The main functions of the foreign exchange reserve contain several aspects, such as guarantying to repay the foreign loan, compensating temporary international payment imbalance, intervening foreign exchange market, maintaining the stability of exchange rate of the domestic currency, enhancing the foreigners'confidence of domestic currency. The scale of one country's foreign exchange reserve must adapt with the economy development. If the scale of the foreign exchange reserve is too small, the economy will be destructed. The little scale of foreign exchange reserves impairs the government to intervene the foreign exchange market, hinders the adjustment of international payment balance, weakens the ability of the government to resist international capital impact and finance risk. Contrarily, the capital of the country will be waste, if the foreign exchange reserve over sizes. The country, which has certain scale of the foreign exchange reserves, means that the country offers certain domestic resources to the foreigners. It means that the country gives up the opportunity to increase the domestic investment and promote economy grew with overseas resources. Therefore, the study of the foreign exchange reserve moderate scale relates the national economy sustainable development.This article reviewed Chinese foreign exchange reserve development course, including the quantity change of foreign exchange reserve, developing process and management system reform. This paper paid attention to the reasons and factors to cause the dramatically increase of Chinese foreign exchange reserve from 1994. This paper introduced and analyzed the models which the foreign scholars and Chinese used to compute the moderate scale of the foreign exchange reserves, including their understanding of the moderate scale of the foreign exchange reserves, the correlating factors analysis, the theories to establish models, and models'flaw. This paper computed the moderate scale of the Chinese foreign exchange reserve with the Heller model and the proportion analytic method, and analyzed the results. According to the above analysis, this paper established the moderate scale model of Chinese foreign exchange reserve and computed the results. Then, the paper elaborated positive and the negative effect to the economy with high quota foreign exchange reserve of China. After that, the paper used the econometrics to analyze the contribution and consumption to the Chinese scale of the foreign exchange reserve the related factors make. This paper analyzed the long-term trend with the Chinese foreign exchange reserves and the main five related factors, that is the exportation, foreign direct investment, gross domestic product,exchange rate, import tendency, with cointegrate analysis method. Finally this paper gave the reasonable suggestions to Chinese foreign exchange reserve management and usage.