Chinese Foreign Exchange Reserves, Policy Choices, and the U.S. Economy
26 Pages Posted: 17 Apr 2017 Last revised: 15 Oct 2019
Date Written: 2017
China is both a major trading partner of the United States and the largest official holder of U.S. assets in the world. The value of Chinese foreign exchange reserves peaked at just over $4 trillion in June 2014 but has since declined to $3.19 trillion (as of August 2016). This very large decline in foreign exchange reserves is unprecedented, and some analysts have speculated that continued sales of these (mostly U.S.) assets might significantly impact the U.S. and global economies. This article explains the reasons for this large decline in official assets, Chinaâ€™s available policy choices, and how these choices could affect the U.S. economy.
JEL Classification: E52, E58, F3, F32
Suggested Citation: Suggested Citation