FOREIGN EXCHANGE RESERVE MOVEMENT IN CHINA BEFORE & AFTER BELT AND ROAD INITIATIVE

Abstract

With the rapid development of China's economy, China's foreign exchange reserves have grown too fast, but the excessive foreign exchange reserves have caused a negative impact on China's economy, such as wasted of resources and increased pressure on the RMB to appreciate. Belt and Road Initiative was the best way to solve the problem of excessive foreign exchange which caused excess capacity and improve diversity of investment. Therefore, in order to reduce excessive foreign exchange reserves and internationalize the RMB, China officially launched the Belt and Road Initiative program in 2015. Based on the two dimensions of GDP and foreign exchange, this paper studies the relationship between them and foreign exchange reserves through the panel regression model, and further explores whether the Belt and Road Initiative policy has a positive impact on China's foreign exchange reserves. This study selects the data of GDP, exchange rate and foreign exchange reserves from 2012 to 2017, all of which are the secondary data. In this study, the mathematical model of China's foreign exchange reserves and GDP and exchange rate (economic indicators) under the background of Belt and Road Initiative is established, which provides data basis for the research and exploration of China's optimal foreign exchange reserves and is of great significance to the healthy development of China's economy.