Why does excessive foreign exchange reserves help to make up the balance of payments deficit, expand imports, safeguard international reputation and increase the pressure of domestic currency appreciation? Under the condition of open economy, the balance of economic aggregate is not only related to savings and investment, but also related to foreign trade. When there is a fiscal deficit, when savings are completely converted into investment, it is necessary to make up for the fiscal deficit by increasing imports to maintain the balance between supply and demand of the total economic output. In that case, it is easy to have the twin deficits phenomenon that fiscal deficit and foreign trade deficit coexist. When there is a fiscal deficit, it is necessary to reduce imports or increase exports (that is, increase net exports) to make up for the fiscal deficit, so as to ensure the balance between supply and demand of the economic aggregate. The reality in our country is that savings have not been fully converted into investment. Since 1998, the proactive fiscal policy has been implemented year after year, and the fiscal deficit has increased year by year. Therefore, the increase in the balance of payments surplus, especially the increase in net exports, has partially made up for the fiscal deficit. Using the balance of payments surplus to make up the fiscal deficit is not only beneficial to the national economic balance, but also can avoid the twin deficits phenomenon.