How best China can fend off financial risks

The Chinese government is currently facing financial trouble as the U.S. faces recession and the Chinese government currently holds large amounts of U.S. dollars in reserve which are declining in value. One suggestion is for China to shift its foreign reserve investment to Europe. A potential problem with this strategy is selecting which markets to invest in and whether Europe will also suffer a major decline from the current political climate.

The author suggests China should invest in Hong Kong's H-share market. The rationale is after the current decline, these stocks can face no further decline. In addition, these stocks are now available at a decent price. If the government were to invest in the H-share market, it could boast the national economy and raise investor's confidence once again. This investment in the future of the country's economic development seems viable because under the current monitoring system in Hong Kong, speculation should not be a problem.

http://www.chinadaily.com.cn/bizchina/2008-10/16/content_7113263.htm