On The Plight Of China's Foreign Exchange Reserves And Measures

In recent years, along with the continuously development of our country's economy, the import and export scale extends continuously too, particularly the first six years after joining the WTO, the changes became more obviously. And also the foreign exchange reserve of our country is often creative high simultaneously. By the end of July 2007, the amount was already nearly 1.4 trillion US. Dollars. How to face it correctly, how to deal with it reasonable, and how can it promote the economy keep on a development, all these have already become a hot topic in our society. Aim at the very rigorous problem of this reality, my dissertation carried analysis major on the reason why our foreign exchange reserve is so large and how to deal with it.The dissertation includes preface and three chapters. The preface introduce the background how I choose this article. Chapter 1 is about the foreign exchange reserve and the reasonable foreign exchange reserve scale. This chapter includes the definitions, the functions, the basic concept of foreign exchange reserve control and some theories and methods concerning about how to define a reasonable scale of foreign exchange reserve; Chapter 2 is the introduction and analysis of our national foreign exchange reserve. This chapter includes the present scale of our country's foreign exchange reserve, the accumulation process of this scale, the reason of this development, and the positive effects and the negative influences that it may brings to the national economic development of our country. Chapter 3 is about the thinking way and the counter plan to the deal with the large scale of our foreign exchange reserve. At first, on the analysis of chapter 2, there are three aspects were given to deal with this issue: to control the scale of balance of payments (scale of relativity) , to free foreign exchange reserve control gradually, and to diversify our reserve assets, then analyses the foreign exchange reserve control system of Singapore and Norway, which have special features and successful experiences. As to the measures, the suggestions is to adopt the policy of 'Foreign Exchange held by the people' , and analyzed the necessity and concrete measure and the problems should be noticed in operation of China Investment Corporation.In conclusion: our national foreign exchange reserve has already been the No. 1 in the world, which has attained more than 1 trillion US. Dollars. From this point of view, It shows a rapidly grow of China economy, this improve our position in world economy and develop our international prestige. The large number of foreign exchange reserve will also has a positive effect on developing foreign trade strongly, improving international investment actively, and fighting against international financial risk. On the other side, However, the foreign exchange reserve scale of the our country has already outrun the reasonable circumscription, as a result, it has made and will continue create negative effects: large number reserve make the exchange rate adjustment mechanism to face a test additionally, enhance Chinese Yuan's appreciation pressure, increase the inflation pressure, restrict and influence the establishment and the implement of independence monetary policy; The reserve property also faces the threat of the depreciation, the return rate of the reserve is low, etc..The accumulation of the large number foreign exchange reserve is the result of current account's favorable balance, capital and financial account's favorable balance and the hot money driven by appreciation expectation of Chinese Yuan superficially. But the more deeply reason is our economy growth mode excessive depended on investment and export currently.Therefore, in order to solve the problem of the plight of China's foreign exchange reserve fundamentally, we should start from the pattern of China's economy development; speed up the transformation of economic development to promote the optimization and upgrading of industrial structure.