2Chinas foreign exchange reserveTable of ContentsChapter 1I. AbstractII. IntroductionChapter 2III. Literature Review IV. The basic situation of recent China's foreign exchange . . … … reserves V. Negative Influence of Foreign Reserve SurplusVI .Influence of Reserve Growth on Money SupplyChapter 3V. Negative Influence of Foreign Reserve SurplusVI. Influence of Reserve Growth on Money Supply VII .Influence of Reserve Growth on National Economy VIII. Recent rise and falls
3Chinas foreign exchange reserveChapter 4IX. The cost-benefit analysis of having large volumes of . foreign exchange reservesA (i) The benefit of maintaining enormous volumes of foreign . exchange reserves（ii) The cost of maintaining enormous foreign exchange reserves B. To begin with, loss of the independence of monetary policy, .. the currency issue is becoming more dollarized.X. Macroeconomic impact of the excess liquidity(i) Aggravating the imbalance in economic structure(ii) Financial cost and opportunity cost(iii)Pressure of RMB appreciationChapter 5 XI. Conclusions and SuggestionsSuggestions(i) Further impel the Reforms of Foreign Exchange Administration. System(ii) Reasonable improvement of foreign trade conditions (iii) Reserve assets management: scale and approach for usage Conclusion
4Chinas foreign exchange reserveChapter 1I.Abstract:China's foreign exchange reserves entered a phase constituting of substantial growth in 2001. China's foreign exchange reserves peaked at 875.07 billion U.S. dollars, by the end of March 2006 to date, number 1 in the world, accounting for over 18% of the world's total reservesduring the same period. Thus one of the main factors affecting China's economic development being its huge foreign exchange reserves via highspeedgrowthinitsforeignexchangereserve. The high speed growth in China’s foreign exchange reserves have significantly contributed in advancing China's comprehensive national strength and management strategy. However, this paper considers that the sustained high speed growth to also be an imbalance in the balance of payments hence has created new issues and challenges, which mainly include the loss of independence of financial policy, creating the macroeconomic impact due to the excess liquidity, disrupting the imbalance in economic structure, losing the financial and opportunity cost, bringing about the RMB appreciation. To find a solution to reduce the pressure of high speed growth of foreign exchange reserves, the paper suggest that rather than only impelling the reforms of foreign exchange administration system further but also to reasonably increase the efficiency of the foreign trade conditions. Simultaneously, assets management reserve requires attention as the supplement.