Management of China's foreign exchange reserves: a case study on the state administration of foreign
AbstractSummary for non-specialistsWith rapid economic growth and continuing economic integration with the outside world, China's foreign exchange (FX) reserves have witnessed considerable accumulation. As of 2009 it amounted to USD 2.4 trillion, accounting for just under 1/3 of the global FX reserves. Rapid growth of FX reserves at this speed has created various problems, e.g. inflationary pressure and huge holding costs.In this paper by analyzing the SAFE - Chinese governmental agency in charge of administering the FX reserves in the country, we review how Chinese FX reserves are currently managed and their performance so far. Then, in the light of these findings and borrowing literature from the current debate on Sovereign Wealth Funds (SWFs), several reform proposals are presented regarding how to better tackle the problems relating to these rapidly accumulated FX reserves in China. It is argued that the proposed reform options not only benefit China, but also help in addressing some wider issues (e.g. global imbalances), therefore contributing to a more harmonious global economy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 421.
Length: 29 pages
Date of creation: Jul 2010
Date of revision:
Contact details of provider:
Postal: Coomunivcations Unit, B-1049 Bruxelles / Brussels
Fax: +32 2 298.08.23
Web page: http://ec.europa.eu/economy_finance/index_en.htm
More information through EDIRC
Yu-Wei Hu foreign exchange rate policy monetary policy China management of foreign exchange reserves international portfolio investment;
Find related papers by JEL classification:
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-28 (All new papers)
- NEP-MON-2010-08-28 (Monetary Economics)
- NEP-TRA-2010-08-28 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bracke, Thierry & Fidora, Michael, 2008. "Global liquidity glut or global savings glut? A structural VAR approach," Working Paper Series 0911, European Central Bank.
- Edwin M. Truman, 2007. "Sovereign Wealth Funds: The Need for Greater Transparency and Accountability," Policy Briefs PB07-6, Peterson Institute for International Economics.
- Hongyi Chen & Lars Jonung & Olaf Unteroberdoerster, 2009.
"Lessons for China from financial liberalization in Scandinavia,"
European Economy - Economic Papers
383, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Hongyi Chen & Lars Jonung & Olaf Unteroberdoerster, 2009. "Lessons for China from Financial Liberalization in Scandinavia," Working Papers 262009, Hong Kong Institute for Monetary Research.
- Roland Beck & Michael Fidora, 2008.
"The impact of sovereign wealth funds on global financial markets,"
Occasional Paper Series
91, European Central Bank.
- Roland Beck & Michael Fidora, 2008. "The impact of sovereign wealth funds on global financial markets," Intereconomics: Review of European Economic Policy, Springer, vol. 43(6), pages 349-358, November.
- Ming Zhang & Fan He, 2009.
"China's Sovereign Wealth Fund: Weakness and Challenges,"
China & World Economy,
Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(1), pages 101-116.
- Zhang Yu Xuan & He Fan, 2008. "China's Sovereign Wealth Fund : Weakness and Challenges," Development Economics Working Papers 21985, East Asian Bureau of Economic Research.
- Zhang Yuxuan & He Fancass, 2008. "China's Sovereign Wealth Fund : Weakness and Challenges," Finance Working Papers 22836, East Asian Bureau of Economic Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ECFIN INFO).
If references are entirely missing, you can add them using this form.