China’s FX Reserves: More is good, enough is better

[TaiShang]

Money only worth its value when you use it, so spending some of our fx reserve in strategic investment is a good choice. But if buying foreign companies no longer works well due to protectionism, then investing in domestic companies, and use these fx reserve to hire talented minds from abroad to work in china might be a good way.

Also try import more strategic natural resources and raw materials, and speaking from my expertise, import more crops seeds and livestock species to expand and diversify our agriculture and aquaculture gene base is also a good move. Gene data might become something very valuable in the near future as genetics technology are booming, hopefully our govt will invest more in gene database.

What's left might just be filling up our gold and silver reserve, precious metals are always a good investment.

Yes, basically, diversification, about which @shotgunner used to provide excellent analyses.

The funds are being channeled into strategic sectors and the fundamentals of the real economy are being propped up.

China still needs the strategic leverage of holding huge FX reserves, but, money is being more effectively used right now, I believe.

For example, SMEs are being more efficiently supported.

R&D in promising, frontier industries is increasing (AI, autonomous driving, alternative energy etc.).

Rural China is being revitalized through more comprehensive education and health services.

SOEs are being reformed, which requires money to train the workforce and upgrade the existing technologies.

These are being done without China government getting into debt/interest payment spiral, which, usually, is what developing countries experience.

This allows China to hold 100% sovereignty in every national decision.

Compared with the US, interesting situation:

[US] Congress scrambles for votes to avoid government shutdown