Study On The Path Of Diversified Investment Of China’s Foreign Exchange Reserves

As the main form of international reserves, foreign exchange reserves play an important role for the stability of a country’s economic development. Therefore, the research on changing and development in foreign exchange reserves has always been a hotspot for scholar at home and abroad. In recent years, the continuous depression of USD against RMB pose a great risk of devaluation on China’s foreign exchange reserves. It is common considered that diversification can reduce the risk of China’s foreign exchange reserves. So the research on how to use foreign exchange reserves to make investment is of great significance to China.The paper firstly reviews the diversification management experience of foreign exchange reserves and search for feasible asset investment paths. Combining with the current situation of China’s foreign exchange reserve investment, the excessive foreign exchange reserve is a problem, and assets are mainly concentrated in U.S. debt assets. By analyzing the financial assets, it is concluded that high rated corporate bonds and stock investment can be an effective way to improve the portfolio returns. By analyzing the advantages and feasibilities of foreign exchange reserve asset securitization, gold investment, strategic petroleum investment and investment in energy efficiency, and put the gold and oil assets into the portfolio model, we find gold assets can obtain more yields than stock investment, but oil physical assets is not a good choice to invest. Therefore, we should increase the investment of oil in the strategic view, and increase the equity investment of oil exploration enterprises, so that we can reduce the risk of investment in real assets. But physical assets can reduce a country’s holdings of foreign exchange reserves in total, thus promote the development of China’s economy and contribute to the stable development of China’s economy.Asset Investment tactics can be different under different economic environment, it is a dynamic process of adjustment. And different investment tactics can bring different asset portfolios which requires a further research on asset portfolios of different investment tactics. Based on the economic environment at home and abroad, investment tactics selection under different environment is put forwarded. Meanwhile, in order provide some reference for China’s foreign exchange reserve diversification, China’s future investment tactics have been selected in accordance to economic prediction at home and abroad. Put forward at this stage, China should take a prudent investment strategy. With the slowdown of the domestic economic and the recovery of international economic environment, China should gradually implement a proactive investment strategy.By analyzing the benefits and risks of CIC’s overseas use of foreign exchange with the method of SWOT analysis, development strategy suitable for CIC is proposed. That CIC should make full use of the undervalued opportunities to broaden the field of investment. So that can diversify the investment of foreign exchange reserves.Finally, based on feasible investment paths of China’s foreign exchange reserves, the trend of future investment development of China’s foreign exchange reserve is put forwarded.