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.