Related News
Hot money boils up banks' foreign capital
By Lydia Chen |
September 21, 2011, Wednesday
|
Online Edition
Online Edition
CHINA is facing increasing pressure from rising amounts of hot money inflows and the central bank today said financial institutions' foreign capital jumped by 72 percent from a month ago in August to nearly 377 billion yuan (US$59 billion).
Financial institutions' yuan positions, accumulated from purchases of foreign exchange by the central bank, saw a net gain of 376.94 billion yuan last month, hiking 72 percent from July, the biggest increase in five months, according to the monthly report released by the People's Bank of China this morning.
In July, capital inflows shrank 20.8 percent from a month earlier to 219.6 billion yuan.
Economists track yuan positions as a barometer for the inflows of speculative money, or hot money. Part of the foreign capital comes into the country as foreign direct investment and trade, which authorities can easily track. The rest is usually considered as hot money since it is hard to monitor.
FDI in China expanded 11.1 percent from a year earlier to US$8.45 billion in August, the Ministry of Commerce said last week. Last month's FDI growth, however, eased from 19.8 percent in July.
Meanwhile, better-than-expected imports helped reduce China's trade surplus to US$17.7 billion last month, the General Administration of Customs said last week.
This means a total of US$32.7 billion in August could be hot money.
"The attraction of China is not only in the prospects of a rising currency but also stable economic performance and higher investment returns," Shen Jianguang, a Hong Kong-based economist with Mizuho Securities Asia Ltd said in Beijing today.
"US Treasuries yield is now below 2 percent and Europe is facing a crisis, so China offers stability and better returns in addition to the prospect of yuan appreciation," Shen said.
The International Monetary Fund yesterday lowered its growth prospect for the world's second biggest economy to 9.5 percent this year from a previous estimate of 9.6 percent, compared with a 1.5 percent prospect for the United States and 1.6 percent for eurozone countries.
The rising capital inflows, however, could compromise the Chinese government's efforts to bring down its high inflation and contain bubbles in some areas such as real estate industry.
China pledged to take more forceful measures to counter inflows of speculative capital in the second half of the year amid loose monetary scenarios overseas and sustained inflationary pressure, the nation's foreign exchange regulator warned last month.
The top priority is to stem an inflow of hot money and other illegal cross-border cash movements, the State Administration of Foreign Exchange said in a statement.
The top currency regulator settled 1,865 criminal cases in the first half of this year involving US$16 billion in foreign currency, the statement said.
Some US$35.5 billion of hot money entered the country last year, accounting for 7.6 percent of new foreign reserves in 2010, the foreign exchange regulator said. Hot money inflows are estimated at US$25 billion annually over the past 10 years, it said.
Financial institutions' yuan positions, accumulated from purchases of foreign exchange by the central bank, saw a net gain of 376.94 billion yuan last month, hiking 72 percent from July, the biggest increase in five months, according to the monthly report released by the People's Bank of China this morning.
In July, capital inflows shrank 20.8 percent from a month earlier to 219.6 billion yuan.
Economists track yuan positions as a barometer for the inflows of speculative money, or hot money. Part of the foreign capital comes into the country as foreign direct investment and trade, which authorities can easily track. The rest is usually considered as hot money since it is hard to monitor.
FDI in China expanded 11.1 percent from a year earlier to US$8.45 billion in August, the Ministry of Commerce said last week. Last month's FDI growth, however, eased from 19.8 percent in July.
Meanwhile, better-than-expected imports helped reduce China's trade surplus to US$17.7 billion last month, the General Administration of Customs said last week.
This means a total of US$32.7 billion in August could be hot money.
"The attraction of China is not only in the prospects of a rising currency but also stable economic performance and higher investment returns," Shen Jianguang, a Hong Kong-based economist with Mizuho Securities Asia Ltd said in Beijing today.
"US Treasuries yield is now below 2 percent and Europe is facing a crisis, so China offers stability and better returns in addition to the prospect of yuan appreciation," Shen said.
The International Monetary Fund yesterday lowered its growth prospect for the world's second biggest economy to 9.5 percent this year from a previous estimate of 9.6 percent, compared with a 1.5 percent prospect for the United States and 1.6 percent for eurozone countries.
The rising capital inflows, however, could compromise the Chinese government's efforts to bring down its high inflation and contain bubbles in some areas such as real estate industry.
China pledged to take more forceful measures to counter inflows of speculative capital in the second half of the year amid loose monetary scenarios overseas and sustained inflationary pressure, the nation's foreign exchange regulator warned last month.
The top priority is to stem an inflow of hot money and other illegal cross-border cash movements, the State Administration of Foreign Exchange said in a statement.
The top currency regulator settled 1,865 criminal cases in the first half of this year involving US$16 billion in foreign currency, the statement said.
Some US$35.5 billion of hot money entered the country last year, accounting for 7.6 percent of new foreign reserves in 2010, the foreign exchange regulator said. Hot money inflows are estimated at US$25 billion annually over the past 10 years, it said.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
