2. Most of China's foreign exchange reserves are in the central bank. In China, CICC and SAFE specialize in managing these foreign exchange reserves, mainly by purchasing government bonds to balance the RMB exchange rate. The utilization rate is not high. It can be said that it has been devaluing. The same is true of big countries such as the United States and Japan. This country has little foreign exchange. The government only needs to keep a small amount of foreign exchange to intervene in the market or settle accounts. Almost all of them are in the hands of the people. The amount of foreign exchange in their hands is staggering. Perhaps only one large export company in Japan has foreign exchange reserves comparable to all our private foreign exchange reserves.
3. Foreign exchange reserves are generally to balance international income, and the purchase of government bonds is to preserve value, which can be done at present. After all, many investment channels are restricted, and CICC will also do some investment banking work for domestic enterprises to list abroad. Buying government bonds is really a last resort, so you must know the country. They are also looking for new channels.
4. Inflation is not the main factor that affects the flow of hot money, but whether the RMB appreciates and how high the interest rate in China is.