Some Considerations on the Security Problem of China's Foreign Exchange Reserve

The author believes that there are two causes for t he security problem of foreign exchange reserve:the continuous deficit in foreign exchange receipt and payment which will lead to the decrease of foreign exchange reserve and the depreciation of foreign exchange reserve which will lead to the decrease in the value of foreign exchange reserve.To guarantee the security of China's foreign exchange reserve,we should,first,strengthen the independent innovation,pay more attention to the industrial and product update,make breakthroughs in such aspects as new energy,new material,biotechnology and green industry,improve our competitiveness in commodity export,work hard to develop such industries as tourism,create a better environment for foreign investment,prevent the abnormal outflow of non-government capital to guarantee the balance of payment and prevent the decrease of foreign exchange reserve.Second,we should optimize the structure of foreign exchange reserve,increase the gold reserve and foreign capital reserve,grant foreign exchange loans by taking the foreign exchange reserve as the credit capital,encourage the development of product export,the export of organized labor services and domestic economy,import the advanced equipment,the scarce raw material and fuel,encourage overseas investment,encourage the people to hold more foreign exchange to preserve and increase the value of foreign exchange reserve.Besides,we should also further explore how to eliminate the adverse effect brought by the slight and slow appreciation in RMB,how to formulate a standard for the rational volume of foreign exchange reserve that meets the requirement of the current situation of the developing countries,and how to set up the warning system for the security of foreign exchange reserve,and strengthen research on the fluctuation and the determination theory of foreign exchange rate of those closely related countries'currency.