The dynamics of Chinese purchases of U.S. securities

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Gardner, Stephen
Cheng, Jen-Chi

Stephen Gardner. (2012). The Dynamics of Chinese Purchases of U.S. Securities. -- In Proceedings: 8th Annual Symposium: Graduate Research and Scholarly Projects. Wichita, KS: Wichita State University, p.30-31


A significant amount of academic literature exits on the United States’ trade deficit, and its financing through foreigners’ purchases of U.S. securities. Over the last several years, the trade relationship between The U.S. and China has received considerable attention as China has acquired large positions in U.S. securities. This study examines the dynamics of how China has allocated its portfolio of short-term and long-term U.S. Treasury securities relative to its holdings of U.S. equity, corporate debt, and asset-backed securities. We find that changes in Chinese holdings of short-term Treasuries are well explained through portfolio allocation dynamics, while changes in Chinese holdings of long-term Treasuries are not well explained by portfolio allocation dynamics.

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Paper presented to the 8th Annual Symposium on Graduate Research and Scholarly Projects (GRASP) held at the Marcus Welcome Center, Wichita State University, April 18, 2012.
Research completed at the Department of Economics, W. Frank Barton School of Business