One reason for the huge Chinese investment in the U.S. economy is:
A) China's desire to control the U.S. economy.
B) the high rates of return on U.S. government securities.
C) the large savings rate in China, which encourages capital outflow.
D) the low savings rate in China, which makes the cost of borrowing very low.

Question

Quizplus · Accepted Answer

China has a large savings rate, with a high proportion of household savings. This encourages capital outflow, with Chinese firms and individuals seeking investment opportunities abroad, including in the U.S. economy. While high rates of return on U.S. government securities may be a factor, it is not the primary reason for the huge Chinese investment in the U.S. economy, nor is there evidence of a desire to control the U.S. economy. The low savings rate in China is also not a factor, as it would make borrowing more expensive rather than encouraging investment.

One Reason for the Huge Chinese Investment in the U