Structural Changes in China–US External Flow of Funds: Statistical Estimates Based on the VEC Model

Nan Zhang () and Yiye Zhang ()
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Nan Zhang: Hiroshima Shudo University
Yiye Zhang: Cornell University

Chapter Chapter 3 in Global Flow of Funds Analysis, 2024, pp 135-177 from Springer

Abstract: Abstract This study constructs an analytical framework of the external flow of funds (EFF) to observe the process and obstacles of China and the United States (US) decoupling, examining the China–US structural relationship in savings and investment imbalance during 1980–2022. We observe the issues between China and the US in the external financial assets and liabilities by stock data, focusing on the external adjustment mode in 2008–2022. We construct a vector error correction model to calculate the quantitative relationship between short-term fluctuations and long-term trends of the EFF in China and the United States and explore the basic causes of economic conflicts between the two sides. This chapter discusses the risk of China–US economic decoupling and US debt, the strategic challenges both sides face, and the prospect of countermeasures.

Keywords: Global flow of funds; Mirror image; Balance sheet; Vector error correction model (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-97-1029-4_3

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DOI: 10.1007/978-981-97-1029-4_3

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