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

Xuepeng Liu, Heiwai Tang, Zhi Wang () and Shang-Jin Wei

Review of Finance, 2023, vol. 27, issue 2, 469-493

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.”

Keywords: Capital controls; currency arbitrage; state control; G15; F3 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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