Chinese Foreign Exchange Reserves, Policy Choices, and the U.S. Economy

26 Pages Posted: 17 Apr 2017 Last revised: 23 Nov 2017

See all articles by Christopher J. Neely

Christopher J. Neely

Federal Reserve Bank of St. Louis - Research Division

Multiple version iconThere are 2 versions of this paper

Date Written: 2017

Abstract

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, China’s available policy choices, and how these choices could affect the U.S. economy.

JEL Classification: E52, E58, F3, F32

Suggested Citation

Neely, Christopher J., Chinese Foreign Exchange Reserves, Policy Choices, and the U.S. Economy (2017). Review, Vol. 99, Issue 2, pp. 207-231, 2017. Available at SSRN: https://ssrn.com/abstract=2952262 or http://dx.doi.org/10.20955/r.2017.207-231

Christopher J. Neely (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
Saint Louis, MO 63011
United States
314-444-8568 (Phone)
314-444-8731 (Fax)

HOME PAGE: http://www.stls.frb.org/research/econ/cneely/

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