A Study on the Reasonable Range of China’s Foreign Exchange Reserves
|Keywords||Foreign exchange reserves Causes Source Hierarchy ofneeds Reasonable size|
Since the beginning of China’s foreign exchange management system reform in1994, China’s foreign exchange reserves from the beginning of "shortage" gradually to "excess". Its fast growth rate is staggering! The huge foreign exchange reserves is different from Adam Smith’s "national wealth", also not folk’s thought "people’s hard-earned money", and also not the same with the mercantilist view of the trade surplus brought by the wealth of nations.The long-term accumulation of China’s huge foreign exchange reserve is a very complex problem. Interpretation from the positive point of view, it is the ineviTable result of China’s sustained and rapid economic development, strong growth in foreign trade and the introduction of large amounts of foreign capital to make up for the domestic capital shortage. From another perspective, it’s also the ineviTable result of factors’ interaction like China’s economic structure and even the global economy structural imbalance and the monetary system leaded by developed countries etc.To clarify the source of foreign exchange reserves, this paper has carried on the analysis from the perspective of international balance of payments. Foreign direct investment and borrowing is the main source of China’s debt of foreign exchange reserves. Trade in goods and services trade surplus is the main source of China’s claims of foreign exchange reserves.The framework of foreign exchange management system has been gradually evolution, which makes these sources eventually formed institutional foundation of huge reserve.The purpose of this paper lies in the reasonable range of China’s foreign exchange reserves. Then how much is the size of the foreign exchange reserves is reasonable? Considering the different function of the foreign exchange reserve plays in economic operation, the paper refers to the concept of foreign exchange reserve demand level. And it considers that the state has a certain order of foreign exchange reserves’preference. When the reserve scale is insufficient, the state will give priority to meet the higher reserve requirements, and then meet the level of the lower reserve requirements. The existence of duplicate or replacement is also between different hierarchies of needs. So the paper combines the research status at home and abroad, introduces Agarwal model, and modifies the marginal cost and marginal benefit of the model. And considering the model itself does not have the reserve demand scale, it obtains thestatic scale of China’s foreign exchange reserves (upper limit). Dynamically scale is not the simple sum of the needs of all levels, but considering the repetitiveness andrepetitiveness between demand levels, so that the paper obtains the dynamic scale of foreign exchange reserves (band).Through an empirical analysis of China’s foreign exchange reserves’ reasonable interval, the paper concludes that China’s foreign exchange reserves have exceeded the reasonable interval. Huge reserve is not onlyrestricted the independence of China’s monetary policy, distorted the structure of money supply, but also brought the pressure of currency appreciation and the excess of domestic liquidity etc. In the current framework of foreign exchange management system in our country, we should take "in the Tibetan people" as the first choice of scattering China’s foreign exchange reserves, including encouraging private use of foreign exchange, the implementation of the "going out" strategy, the establishment of the international board etc. At the same time, relying on the RMB internationalization strategy, the corresponding policies are at different stages of the RMB internationalization strategy process. Take the initiative to alleviate the excessive accumulation of China’s foreign exchange reserve. Finally, aiming at the demand of foreign exchange reserve in different levels, the paper designed a framework arrangement of foreign exchange reserve level management, in order to optimize China’s foreign exchange reserves management, also in line with our diversified management of foreign exchange reserves.