Influx of hot money into China: More obviously false trade data

By | May 21, 2013

Judging from the recent months, the RMB exchange rate (both nominal exchange rate and real effective exchange rate) was growing faster, it seems that the monetary easing policy adopted in the developed countries resulted in a trend of competitive devaluation of various currencies, thus a lot of liquidity is seeking arbitrage opportunities; while in China the RMB exchange differences have attracted the inflow short-term cross-border capital through trade channels.

On May 17, the State Administration of Foreign Exchange announced in April, China’s banking Valet foreign exchange amounted $ 134 billion, Sale of $ 99.7 billion, with a $ 34.3 billion of foreign exchange settlement surplus. Valet exchange settlement for eight consecutive months yields a surplus since September last year. Financial Insiders pointed out that the Valet exchange settlement bank continues to maintain a large-scale surplus, indicating that the market holds still strong expectations of RMB appreciation, resulting in large-scale foreign exchange.

Strong expectation of RMB appreciation, the influx of hot money is more and more obvious. The new foreign exchange in April was 294.4 billion yuan, a trade surplus of 18.16 billion U.S. dollars, with a FDI of 84.35 billion in April, according to “residual method”, the hot money amounted about $ 20.75 billion.

“In the past, overseas hot money’s inflow into China will adopt a more subtle way, such as underground banks, container trucks, but they are more direct in term of creating the blatantly false trade data” a foreign investment bank analyst told the “Daily Economic News “reporter.

Source: 每日经济新闻(Daily Economic News)

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