The Mutual Influence Of Foreign Exchange Reserve And "One Way" Strategy

Foreign exchange reserve plays an important role in adjusting internationalpayment, stabilizing foreign exchange rate, maintaining international credit standingand avoiding or preventing financial crisis. But going beyond the limit is as bad asfalling short, now the nearly$4trillion foreign exchange reserve also brings somenegative impacts to the economic development. Meanwhile weak external demand,overcapacity and the heavy environment load are also three problems restrictingChina’s economic development, and the export-oriented economic developmentfeaturing with high pollution and high energy consumption is unsustainable now. Sothe one belt one road strategy is the product and the way out of the complex economicsituation. On one hand it seeks to solve the problem of overcapacity and inject vigorto the domestic economy development, on the other hand it is also an effort forforeign exchange reserve investment diversification and may alleviate its negativeeffects.With the accumulation of huge foreign reserve and one belt one road strategy putforward in the economic transformation era, this article aims to analyze the mutualeffect between foreign exchange reserve and the one belt one road strategy. To start,the paper introduces the definition of foreign exchange reserve and one belt one roadstrategy. Second it analyzes the current situation of China foreign exchange reserveand its negative impact on economic development. Third it analyzes the mutualinfluence between China foreign exchange reserve and one belt one road strategy, i.e.how foreign exchange reserve promotes one belt one road strategy and how thestrategy alleviates the negative effects. Finally it analyzes the risk of foreign reserveusing in one belt one road strategy and gives some advice.