Abstract:

China's foreign exchange reserves have drastically increased since 1994 owing to its quick economic growth and double surplus of international payment balance, and also because the foreign exchange administration system demands a compulsory sale of foreign exchanges under the working of relevant market factors. The two features distinguish China's foreign exchange reserves from Western countries'. First, China's official foreign exchange reserves include civilian foreign exchange reserves. Second, so far as their source is concerned, they have characteristics of borrowed reserves. After a comprehensive consideration of above mentioned factors and China's position in the international political structure, we cannot reach the conclusion that China's foreign exchange reserves are overmuch.

Key words: foreign exchange reserve, adequate foreign exchange reserve, China, balance of payments