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People's Daily Online>>China Business

Is international 'hot money' flowing into China?

By Tian Junrong (People's Daily)

10:28, March 04, 2012

Edited and translated by People's Daily Online

In January of 2012, the total amount of China's funds outstanding for foreign exchange increased by about 141 billion yuan compared to that in the end of 2011.

Therefore, some people believe that China's inflow of capitals will sharply increase to the level of past years. Some even claim that the “hot money” is coming back.

Comprehensive and rational analyses are needed to study and judge the flowing trend of cross-border capitals. The flow of cross-border capitals will neither reverse nor increase to the past level, but will maintain inflow. And the scale of the net inflow will probably decrease with fierce fluctuations.

In the future, some fundamental factors will help China maintain international balance of payment surplus. China's deposit will still be larger than its investment and the trade surplus will not change. China's economic train will still travel ahead steadily and relatively rapidly, the prospect of China's domestic market will be promising, the foreign exchange reserves is abundant, and it is quite possible that China will continue attracting long-term international capitals to flow in. All of these fundamental conditions decide that China will maintain a net inflow of cross-border capitals for a period.

However, the total amount of the net inflow of cross-border capitals will be smaller than that of past years.

In the fourth quarter of 2011, China's inflow of cross-border capitals slowed down obviously, and furthermore, outflows appeared in some fields. That was mainly because a lot of cross-border capitals flowed back to developed countries to hedge the risk caused by European and U.S. debt crises and the constant fluctuations of the international financial market.

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Leave your comment3 comments

  1. Name

kkr at 2012-03-0659.161.166.*
yes.Once that wall street take a control on chinese stock market they will play with whole country and economy when ever they want.The total europe and some asian countries tie up their hands and mouths in some situations even they know it"s wrong inorder to save their countries econonmy controlled by wall street.So beware it may lead you to lose your friends and brothers.
Ah Kow at 2012-03-05115.135.188.*
Guard your RMB as a medium of exchange and not for speculation.Do not let it be polluted with toxic and paper monies causing bubbles. It is opium.
Paul Volker at 2012-03-05199.94.8.*
Wall Street investment bankers are plotting to steal wealth from both Chinese private and public sector. China should cut all ties with US financial service sector now.

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