Advanced Search
MyIDEAS: Login

Why China Should Invest Its Foreign Exchange Reserves in the Major US Banks

Contents:

Author Info

  • Qianbing Chen
Registered author(s):

    Abstract

    The subprime mortgage crisis and the resultant inflationary monetary policy in the USA have left the Chinese economy subject to four risks in particular. First, China's exports to the USA might continue to decline. Second, in the medium term, the higher US inflation rate will lead to a weak dollar, which will negatively affect China's exports. Third, in the long term, when the US Federal Reserve decreases money supply to control inflation, the US economy might enter another recession, hurting China's exports further. Fourth, China's foreign exchange reserve assets might suffer heavy losses when the US inflation rate rises. Conventional foreign exchange investment strategies are insufficient for dealing with these four risks. Investment by China in the major US banks is suggested in the present paper. This strategy would mitigate if not eliminate all four risks. China could gain considerable financial returns on investments with only moderate risk. Copyright (c) 2009 The Author Journal compilation (c) 2009 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1749-124X.2009.01155.x
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Institute of World Economics and Politics, Chinese Academy of Social Sciences in its journal China & World Economy.

    Volume (Year): 17 (2009)
    Issue (Month): 4 ()
    Pages: 1-17

    as in new window
    Handle: RePEc:bla:chinae:v:17:y:2009:i:4:p:1-17

    Contact details of provider:
    Postal: No. 5 Jian Guo Men Nei Street, Beijing 100732
    Phone: (0086-10) 65126105
    Fax: (0086-10) 65126105
    Email:
    Web page: http://www.blackwellpublishing.com/journal.asp?ref=1671-2234
    More information through EDIRC

    Order Information:
    Web: http://www.blackwellpublishing.com/subs.asp?ref=1671-2234

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Meixing Dai, 2011. "Motivations and strategies for a real revaluation of the Yuan," Working Papers of BETA 2011-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. Dai, Meixing, 2012. "In Search of an Optimal Strategy for Yuan’s Real Revaluation," MPRA Paper 41047, University Library of Munich, Germany.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:bla:chinae:v:17:y:2009:i:4:p:1-17. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.