Abstract
Abstract This paper studies the diversified investment of China's foreign exchange reserves from a new perspective of energy strategy. A model is designed to analyze investment strategy of Chinese sovereign wealth fund (SWFs) based on specific investment objective to maximize national welfare, regarding SWFs as one part of China's energy strategy. The theoretical analysis and simulation suggest that the strategy sovereign wealth fund can increase the national welfare. As an instrument to hedge the risk of national economy, strategy sovereign wealth fund prefers to invest in the strategic industry such as petrol and metal industries aboard. The more the strategy sovereign wealth fund hedges the risk, the more the whole national welfare increases.
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