Business, Management and Accounting
8 years ago

China's excessive foreign exchange reserve hinders economic growth and stability.

Journal of Harbin Institute of Technology
Current situation and policies concerning foreign exchange reserve in China
Yue Zhao

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China's Foreign Exchange Reserve Crucial for Economic Stability Amid Global Uncertainty

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China has a large foreign exchange reserve of USD 3464.76 billion, second only to Japan. However, having too much reserve can hinder foreign funds from benefiting China's economy. The Central Bank faces challenges like inflation and pressure to revalue the RMB. It is crucial for China to maintain a reasonable reserve size and implement a system for buying and selling foreign exchange. Quality of foreign funds and foreign exchange risk management should also be improved.