Call for more action on hot money, illegal flows
1 August 2007
More needs to be done to combat flows of "hot money" and illegal domestic funds that are driving up property and stock market prices, according to the central bank's chief money-laundering analyst. "Hot money" is the term used to describe speculative funds from overseas that seek to profit from the continuous appreciation of the renminbi. But Chai Qingshan of the People's Bank of China suggested that the funds weren't purely a currency bet, noting considerable gains from speculation on property and stocks compared to the single-digit returns on standard renminbi appreciation, the South China Morning Post reported. Corrupt officials, meanwhile, continue to misappropriate public funds to invest in the stock market. Chai warned the government to pay particular attention to short-term debt as a result of hot money flows. China's foreign debt reached US$331.56 billion by the end of March, up 2.65% year-on-year. Short-term external debt rose to a record 57.5% of total external debt.