Part 5 of China’s “Hot Money” Problems. If the Chinese government determines it is necessary to take action, it has a number of options on how to slow down the flow of “hot money.” However, each option has potentially negative side effects. Appreciate — or Depreciate — the RMB. An increase in the value of […]
Part 4 of China’s “Hot Money” Problems. The main concern in China over the influx of “hot money” has been that it may add to China’s inflationary pressures. In July 2008, the government reported that the consumer price index had risen by 7.9% over the first half of 2008 over the same period in 2007 […]
Part 1 of China’s “Hot Money” Problems. China has experienced a sharp rise in the inflow of so-called “hot money,” foreign capital entering the country supposedly seeking short-term profits, especially in 2008. Chinese estimates of the amount of “hot money” in China vary from $500 billion to $1.75 trillion. The influx of “hot money” is […]