China tackles inflows of 'hot money'

08:25, November 10, 2010      

Email | Print | Subscribe | Comments | Forum 

Monetary authorities vowed Tuesday to beef up tracking on foreign capital inflows in an effort to stop speculative funds from flooding into China, following the latest US stimulus measures that experts said have set off alarm bells for the nation.

The pledge was timed to coincide with two senior central bank officials' warnings over possible inflation and market bubbles in the wake of the US Federal Reserve's second round of quantitative easing (QE2) an-nounced last week.

"With the US restarting quantitative easing, we will pay greater attention to inflation and every change in the economy index," Du Jinfu, assistant governor of the People's Bank of China, said Tuesday at a forum held in Beijing.

Separately, Ma Delun, another central bank assistant governor, said, "The US should not only base its currency policies on its own interests, but also to stabilize the global economy."

The State Administration of Foreign Exchange said in a statement Tuesday that it would strengthen the system on monitoring foreign funds in order to keep close track on the whereabouts of capital flows. The government will tighten the management of banks' foreign-debt quotas and introduce new rules on their currency provisioning, the statement said.

Song Guoliang, a professor with the School of Banking and Finance at the University of International Business and Economics, told the Global Times Tuesday that the current foreign exchange regulation policy is effective in controlling the inflow of capital in large sums, but China should guard against the inflow of capital from private and illegal channels.

"We cannot afford to ignore such money flowing into the Chinese market. It comes from underground banks or fake trade orders. But, from our previous experience, the inflow of hot money will not do devastating damage to China's financial markets under the current financial surveillance program," Song said.

Michael Pettis, a Beijing-based finance professor, said over-intervening in the market would lead to an increase of illegal money flows, which are untraceable and hurt the market system in the long term.

By Liu Linlin, Global Times
【1】 【2】


  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Chinese Navy soldiers hold an evening party marking the upcoming 62nd National Day aboard Chinese Navy hospital ship "Peace Ark" in the Pacific on Sept. 28, 2011. The Chinese National Day falls on Oct. 1. (Xinhua/Zha Chunming)
  • Photo taken on Sept. 30, 2011 shows the crowd at the plaza of Beijing Railway Station in Beijing, capital of China. The railway transportation witnessed a travel peak with the approach of the seven-day National Day holidays on Friday. (Xinhua)
  • A man wearing high-heel shoes takes part in the 3rd annual Walk a Mile in Her Shoes, an event when men literally walk in women's shoes to raise awareness about ending violence against women, at Yonge-Dundas Square in Toronto, Canada, Sept. 29, 2011. (Xinhua/Zou Zheng)
  • Photo taken on Sept. 29, 2011 shows a cargo ship in danger on the sea near Zhuhai City, south China's Guangdong Province. Cargo ship Fangzhou 6 of Qingzhou of southwest China's Guangxi Zhuang Autonomous Region lost control after water stormed into its cabin due to Typhoon Nesat on the sea near Zhuhai Thursday, leaving 12 crew members in danger. Rescuers rushed to the ship and saved them by using a helicopter. (Xinhua)
  • Actress Gong Li poses for L'Officiel Magazine. (Xinhua Photo)
  • Demonstrators from the Occupy Wall Street campaign hold placards as they march in the financial district of New York September 29, 2011. After hundreds of protesters were denied access to some areas outside the New York Stock Exchange on September 17, demonstrators set up a rag-tag camp three blocks away. Zuccotti Park is a campground festooned with placards and anti-Wall Street slogans. The group is adding complaints of excessive police force against protesters and police treatment of ethnic minorities and Muslims to its grievances list, which includes bank bailouts, foreclosures and high unemployment. (Xinhua/Reuters Photo)
Hot Forum Discussion