MNI BRIEF: China Should Diversify FX Reserves - State Media

China should diversify the use of its USD3 trillion-plus of foreign exchange reserves to serve the country’s global strategy and hedge external shocks, said the state-owned Economic Daily in a commentary piece on Friday.

The significant forex reserves should be used to expand investments in equities, bonds and mutual funds, the newspaper said. Reserves should also be used within current funds, such as The Silk Road Fund, China-Latin America Production Capacity Cooperation Investment Fund and China-Africa Fund for Production Capacity Cooperation, the newspaper said. However, the use of forex reserves should prioritise the safety of the investment, it noted.

Forex reserves have remained stable and adequate in recent years, and worked as a “reservoir” to prevent volatile cross-border capital movements, it said.