Currency Carry Trade by Trucks: The Curious Case of China’s Massive Imports from Itself

Xuepeng Liu; Heiwai Tang; Zhi Wang; Shang‐Jin Wei

doi:10.1093/rof/rfac015

Review of Finance Vol. 27 No. 2 2023

Currency Carry Trade by Trucks: The Curious Case of China’s Massive Imports from Itself

Xuepeng Liu¹; Heiwai Tang²; Zhi Wang³; Shang‐Jin Wei⁴

¹ Kennesaw State University , Kennesaw, GA, · ² University of Hong Kong , Pok Fu Lam, · ³ University of International Business and Economics, George & Mason University , Fairfax, VA, · ⁴ Columbia University, Fudan FISF, ANU CBE, NBER & CEPR, New York, NY,

open access

Abstract

With capital controls, the standard financial market transactions needed for currency carry trade are hard to implement. Using detailed trade data reported by both the mainland Chinese and Hong Kong’s governments, we present evidence that indirect currency carry trade likely takes place via round-trip reimports. We also show that greater state control in terms of more state-owned firms does not reduce such “carry trade by trucks.”

DOI: 10.1093/rof/rfac015
Volume: 27
Issue: 2
Pages: 469-493
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Currency Carry Trade by Trucks: The Curious Case of China’s Massive Imports from Itself

Abstract

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