| With the deepening of globalization, our country has already ranked among the list of big global trading country. The important impact of China's foreign trade on the global macroeconomic should not be underestimated. Since the reform and opening up, China's foreign trade have made great strides both in quality and quantity. Following the overall size of China's foreign exchange reserves had surpassed Japan to become the first foreign power at the end of February 2006 for the first time, China's foreign exchange reserves in 2009 was over two trillion U.S. dollars, reached 2.399 trillion U.S. dollars, accounting for 30.7% share of global reserves and consecutive ranked the first in the world for four years. A country's foreign exchange reserves is a sign of economic strength, the greater the foreign exchange reserves, the stronger of a country's economic strength and the stronger of resistance to economic disaster. Large sum foreign exchange can increase the capacity of government macro-control, increase the international bargaining chip, help to enhance China's international status and to maintain macroeconomic stability. However, foreign exchange reserves is not the more the better, the rapidly expanding foreign exchange reserves show a lot of pressure to the economy. The subprime mortgage crisis at United States in Second half of 2007, sweeped the global economy and forced the dollar devalue, made massive trade deficit, let the world economy in tension. The United States has gave pressure on RMB appreciation. China's foreign exchange reserves is huge, it shows there would be a considerable part of the hands of the RMB control in other countries. If such control is growing, it will reduce the control right of RMB, which means to reduce the power of economic control. How to define the appropriate size of foreign exchange and to manage foreign exchange has become a hot topic between academia and the government.While rapid growth in foreign exchange reserves, China's economy shows rapid growth for many years, China's economic growth rate reached 10.6% over the past five years on average. China's economy and foreign exchange reserves are both in the context of rapid growth, I try to put the two into the framework of the same under the previous theory.At first, this paper is based on the time-series data of the sample interval for the 1952-2008on the relationship between foreign exchange reserves and economic growth. In the dynamic test, data was used to remove trend items and extract its cyclical factors by the method of HP filter, then applies to the related dynamic test, Granger causality test and impulse response analysis. The results shows: foreign exchange reserves are Granger causes to economic growth, but do not have two-way relationship between Granger; foreign exchange reserves has positive impact to the economic growth in the long run. Then select monthly time series data about foreign exchange reserves, CPI and the exchange rate of RMB against the U.S. dollar from 1994.1 to 2008.6, through the ADF unit root test, Johansen test node and vector auto regression (VAR) model to analyze the transmission mechanism of the impact of foreign exchange reserves to economic growth. Those empirical analysis will help us to have correct view on the impact of foreign exchange reserves to China's economic growth in the long term. |
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