There are many sources of foreign exchange, mainly domestic export enterprises export goods, in return, that is, through trade surplus. But now it may be more hot money, and there are some direct investments by foreign-funded enterprises. These foreign currencies cannot be circulated in China and need to be converted into RMB. China's foreign exchange policy is managed by the central bank, that is, commercial banks at all levels below must turn over foreign exchange, that is, exchange it with the central bank into RMB, which is kept by the central bank. When an enterprise needs to import, it will purchase foreign exchange in RMB. The increase in China's foreign exchange shows that the foreign currency flowing into China has increased.

At present, the continuous increase in foreign exchange holdings is definitely a bad phenomenon for China's economy. It is necessary to understand where the foreign exchange reserves are, and they are constantly depreciating, rather than the value-added attribute that money should have.