Global Foreign Exchange Reserves, Foreign Equity Investment Analysis

China's foreign exchange reserve had reached 1.53 trillion US dollars by the end of 2007, up over 43.3 percent from 2006. Although the sufficient quantities of foreign exchange meet the higher reserve requirement, the structure of liquidity overplus affects the validity of monetary policy and the independence of the People's Bank of China.Along with the rapid growth of global foreign reserve and the performance of liquidity overplus, it has gradually become a focus of concern to increase the returns on foreign exchange reserve investment on the basis of safety and liquidity. Overseas stockholder's rights investment with high profitability based on the consideration of foreign exchange reserve is an effective way for management of huge foreign reserve.While learning from the experiences of several representative states on the active management of foreign exchange reserve especially the advanced management and governance of Singapore "Temasek Holdings" operation model, this paper analyses the theoretical value and practical significance of overseas stockholder's rights investment by investigating the investing projects of China Investment Corporation, which is the country's new sovereign wealth fund. The active management of foreign exchange reserve aims to stabilize the long-term sustainable development of macro-economy and increase people's welfare level when certain return yield of investment is achieved under the condition of security and liquidity.Based on brief considerations on Project's Investment Risk Return Model, this paper tries to carry out a systemic and deep research for the profitability and risk of overseas stockholder's rights investment and highlights the necessity of curbing the excessively rapid growth of foreign exchange reserve scale.The final section is about the preliminary framework on investment risk control, in which it illuminates the policy proposals on construction of a high quality overseas stockholder's rights investment system in accordance with international experiences in advancing comprehensive management level of foreign exchange reserve.