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A report released on Feb. 17 by the CCP indicated,
foreign capital inflow in 2010 was US$35.5 billion.
Statistics show, however, hot money in the 1st quarter
this year is already greater than the total in 2010.
Financial experts say, on one hand, the CCP regime
endeavored to attract foreign hot money to China, but
on the other hand, it is unable to suppress the inflation
caused by the hot money.
Eventually, the victims will be ordinary Chinese folks.
According to a 2010 report of capital flows in China
by the State Admin. of Foreign Exchange (SAFE),
the net international hot money to China in 2010
was US$35.5 billion
It was 42% higher than the average of past 10 years.
The data from SAFE were widely questioned.
In mid 2010, Shanghai Securities News estimated that
the hot money in the 1st quarter already surpassed
US$70 billion, doubling the total in 2010 by SAFE.
Li Youhuan, the only scholar officially entrusted
to investigate underground banking activities in China,
said that from March 2010, hot money entering China
more quickly. By monitoring 100 underground banks,
he found in the 1st half of Nov., hot money coming to
China through underground banks increased 30%
over Oct. It was estimated that hot money in Nov. 2010
could have been 100% more than that in Oct.
Analysts from private sectors believe that the official
hot money figure is seriously underestimated.
Lu Chunjie, an analyst from Guotai Junan Macro Co.
said, last year's hot money entering China exceeded
the official figure of US$35.5 billion.
It was as high as US$200 billion.
Ding Jianping, prof. at Shanghai Univ. of Finance,
Said, overseas money inflow is not scary.
The really scary part is when the money comes
out of China after it has made profits.
A report 「Venting China Hedge Fund in Action」 on
issue No. 210 of the New Epoch Weekly said, many
hedge funds believe that China, the biggest global
bubble economy, is heading for explosion now.
The article said, about 6 months ago, funds masters
Hugh Hendry and James S Chanos expressed their
worries about the outlook of Chinese economy and
bet that China was facing a stern recession.
Today, more and more hedge funds, including IMF,
Mayfair Hedge Fund, Lombard Street Research, and
Corriente Advisors, believe that Chinese economy is
at the verge of collapse and some of them have already
taken actions to short sell their stocks in China.
NTD TV's Independent Commentary program said
at the end of 2010, despite the strict control of foreign
exchanges in China, international hot money still
entered china via underground banks, fake trading,
and setting up companies in China.
Caoyan Jushi, a famous economist: 60% to 65% of
the hot money entered commodity and real estate
markets. Only 30% is in stock market. All the rest
are in goods market. So, the price of the goods
in China is bound to soar. So is inflation.
Program host Wu Fan said, active inflow of hot money
into China is a big headache to Chinese government.
They worry about stock market crush, so they need
hot money to support China's stock market.
However, appreciation of RMB attracts hot money
but also escalates inflation at the same time.
Interest hike cannot solve the inflation problem.
Instead, it increased the deposit return for the hot money.
Wu Fan: Ordinary people in China are hit the most.
Why? Once the prices of goods and housing soar,
it is difficult for them to come down.
With no increase on salary, ordinary people have to
bear the consequences of inflation caused by hot money.
Caoyan Jushi also said, the CCP is always slapping
its own face. On one hand, it creates opportunities
to attract hot money into China, while on the other
hand, it says hot money undermines social stability.
NTD reporters Wu Wei and Li Lu