Forex Reserves: How Much is Too Much?

XIE Taifeng1 (谢太峰)

Editorial note:

The growth of China’s foreign exchange reserves has caused a stir around the world, with debate raging over whether the country is holding too much in the way of forex reserves. How should we regard this issue? The following study expresses the belief that, firstly, although China’s forex holdings have surpassed the $800 billion mark, there is insufficient evidence to say that this is too much; secondly, the reserves are following their own course of development; and thirdly, the growth is normal, reasonable and acceptable provided the domestic economy remains healthy.

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