Pondering the future of huge overseas cash assets

Updated: 2013-02-25 11:23

(China Daily)

  Print Mail Large Medium  Small 分享按钮 0

Pondering the future of huge overseas cash assets

I hope the country's new central administration can grab the opportunities and use the huge foreign exchange reserves to solve the current local governments' debt problems.

As China has a relatively low level of inflation, it is now a perfect time to reform the management of foreign exchange reserves.

The reserved fund can be taken to pay back the bank loans and the commercial banks will be able to support more small and medium-sized enterprises.

The local governments' fiscal system then will depend less on selling land and expand more to improve livelihoods. It can also accelerate the urbanization process.

Cao Wenlian, deputy secretary-general of the China Center for International Economic Exchanges

Pondering the future of huge overseas cash assets

The new office SAFE Co-Financing can directly use foreign exchange reserves to support the "going global" strategy of Chinese financial institutions and other enterprises. It is much better than investing the fund in stocks and bonds overseas.

At the same time as chasing higher gains, managers of the foreign reserves should pay attention to safety. Compared with the traditional investment methods, the entrusted loan business will have much more risk, which requires SAFE to strengthen the management.

Many of the investment projects undertaken by the new office are huge and sensitive, such as resource exploitation and infrastructure construction, so Chinese enterprises should establish efficient communication with the host countries.

Mei Xinyu, a researcher at the International Trade and Economic Cooperation Institute of the Ministry of Commerce

The central bank's management work on foreign exchange reserves has shown a trend of attaching more importance to investment returns.

Pondering the future of huge overseas cash assets

The investment methods have expanded from bank deposits, sovereign debts and high credit-rating local government bonds to assets-backed securities, mortgage-backed securities and corporate bonds.

The central bank is expected to diversify the investment of foreign reserves into different asset portfolios and set up different investment rules accordingly.

A basic way is to invest through the independent sovereign wealth fund, such as China Investment Corp.

Wang Yongzhong, a researcher with the Institute of World Economics and Politics of the Chinese Academy of Social Sciences

Pondering the future of huge overseas cash assets

The growth of China's foreign exchange reserves has become modest rather than high speed, which is the result that we have been expecting to see for many years. That is significant for reducing the pressure for yuan appreciation and keeping a stable exchange rate.

Rather than investing in low-return government bonds, the reserves could lend to Chinese enterprises as foreign currency loans, which will enjoy a higher return than from traditional ways.

Zhao Qingming, an economist with China Construction Bank