Studies on China's Foreign Reserves - Its Adequacy and Investment Strategy Suggestions

Since China's reform and opening up, its international status has been enhanced with the rapid accumulation of national wealth. A great quantity of foreign investments has been attracted into China because of its preferential policies, as well as broad market and population. They push forward China's imports and exports, and also accelerate the accumulation of foreign reserves. China replaced Japan as the world's largest foreign reserves holder at the beginning of 2006. Since then, its adequacy and investment strategies had become a popular topic. This paper is focused on above thesis. After applied several ratio-benchmarks studies the results illustrate that China's foreign reserves are adequate. Its investment strategies should focus more on foreign equities.