Abstract: China's foreign exchanger reserve grows so fast that it has ranked the top in the world. On the one hand, huge foreign exchange reserves enhance our external payments and the ability to repay foreign debts. On the other hand, it brings many risks such as exchange rate risk, structure risk and revenue risk. This paper analyzers risks of China's large reserve of foreign exchange and causes of such risks; and based on foreign advanced experience of reserve management, the paper puts forward some possible solutions to lower the risks.