China's Foreign Exchange Reserves Growth And Management Issues

The foreign exchange reserves are the important component for international reserves, and play important role under the background of economic globalization. The adequate foreign exchange reserves not only can regulate the international balance payments, but also stable currencies, raise the national currency's international reputation, and safeguard the national economic and financial security. However, if a country's foreign exchange reserves are too large, it will have negative effects on the national economy, so that foreign exchange reserves must adapted to the development of country's economy. The rapid increasing of China's foreign exchange reserves is the result of China's economic power and comprehensive national strength. With China's foreign exchange reserves increase year by year, the 2.4 trillion foreign reserves have attracted the widespread attention at home and abroad. How much for China's foreign exchange reserves? Is it good not for China's foreign exchange reserves too large? What effect China's huge foreign exchange reserves do on China economic growth? How to optimize the management of huge foreign exchange reserves? These issues become the hot topics of the theoretical research.In this paper, we analyze the exchange reserves management of China from the theoretical and practical views, and put forward some countermeasures for the optimization of foreign exchange reserves management. This article is organized as following:firstly, we review the basic theory of foreign exchange reserves. The foreign exchange reserves are to regulate the balance of payments, make the exchange rate stable, and repay the external debt. Secondly, we make comparative analysis of other countries'foreign exchange reserve management system, and summarize beneficial enlightenments for China. Finally, we propose countermeasures to optimize our country foreign exchange reserve management, which include to introducing the marketability in the foreign exchange reserve management, the foreign exchange reserve scale management and the foreign exchange reserve structure management and so on.The results suggest that, we must face the negative effects which have brought by China's huge foreign exchange reserves, and optimize the management of foreign exchange reserves. We should adjust the economic policy of China, alleviate the structural problems of China's foreign exchange reserve growth, then make China's economy sustainable, and achieve internal and external balance.