impacts of China's foreign exchange reserves
The impacts of China’s foreign exchange reserves Difang Deng
February 2014
Abstract
This paper intends to figure out the impact of china’s foreign exchange reserves in both its investment profitability and its influence in domestic economic environment and in the global market followed which is the suggested solution to improve the current situation economically and financially. The structure of the paper is first the introduction and the cause of the China’s large amount of foreign exchange reserves. And secondly the paper introduced the management of the foreign reserve investment addressing the management authority, investment profitability and the risks faced. Thirdly comes to the analysis of the purpose if holding the foreign exchange reserves and the domestic and global impact of China’s foreign exchange reserve. Following is the suggested solutions regarding its impacts and performance. At last is the summary of the major structured points of the paper.
Key word:
China’s foreign exchange reserves
Contents
1.Introduction ....................................................................................................... 3
2. The cause of China’s foreign exchange reserve ................................................ 4
3. The management of China’s foreign exchange reserves .................................. 5
3.1 official management authority ................................................................ 5
3.2 The profitability of China’s foreign exchange reserves investment ........ 6
3.3 Risk in China’s foreign exchange reserve Investment .............................. 8
4. Purpose of holding the foreign exchange reserves .......................................... 8
5. Impacts of China’s foreign exchange reserves .................................................. 9
5.1 Inflation pressure................................................................................... 10
5.2 The pressure on RMB appreciation
February 2014
Abstract
This paper intends to figure out the impact of china’s foreign exchange reserves in both its investment profitability and its influence in domestic economic environment and in the global market followed which is the suggested solution to improve the current situation economically and financially. The structure of the paper is first the introduction and the cause of the China’s large amount of foreign exchange reserves. And secondly the paper introduced the management of the foreign reserve investment addressing the management authority, investment profitability and the risks faced. Thirdly comes to the analysis of the purpose if holding the foreign exchange reserves and the domestic and global impact of China’s foreign exchange reserve. Following is the suggested solutions regarding its impacts and performance. At last is the summary of the major structured points of the paper.
Key word:
China’s foreign exchange reserves
Contents
1.Introduction ....................................................................................................... 3
2. The cause of China’s foreign exchange reserve ................................................ 4
3. The management of China’s foreign exchange reserves .................................. 5
3.1 official management authority ................................................................ 5
3.2 The profitability of China’s foreign exchange reserves investment ........ 6
3.3 Risk in China’s foreign exchange reserve Investment .............................. 8
4. Purpose of holding the foreign exchange reserves .......................................... 8
5. Impacts of China’s foreign exchange reserves .................................................. 9
5.1 Inflation pressure................................................................................... 10
5.2 The pressure on RMB appreciation
References: Data: "The Scale of Chinas Foreign Exchange Reserves (1950-2011)",Retrieved from State Administration of Foreign Exchangehttp://www.safe.gov.cn/ [01.02.2014] Hu Yuwei, 2010,"Management of China 's foreign Exchange Reserves: a case study on the state administration of foreign exchange (SAFE)", European Economy, Economic José Luis Escrivá, Alicia Garcia-Herrero, Galo Nuño, Joaquin Vial，2008，"After Bretton Woods II"，BBVA working paper June, 2008. Ma Cihui, 2007," China 's Foreign Exchange Reserves: Cause, Consequence and Solution ". Wang Yongzhong, 2010,"The Structure ,Return and Risk of China 's Foreign Exchange Reserves" ,International Trade and Investment series, working paper No.10004.