Financial security a priority
While China moved to cope with hundreds of billions of US dollars of speculative money that had already poured into the country, it was taking much stricter measures to monitor the capital flows and prevent more "hot money" from flooding in.
In mid-April, the State Council, China's Cabinet, called a special meeting to discuss the seemingly unstoppable capital inflows.
The meeting was also attended by all concerned central government departments, such as the Finance Ministry, the central bank, the China Banking Regulatory Commission and SAFE.
According to the Shanghai-based China Business News, ahead of the meeting, several central governmental departments had received a special report, more than 200 pages long, about the "hot money" inflows.
On May 9, Vice Premier Wang Qishan, who was in charge of financial affairs, sounded wary when he stressed the importance of the country's financial security in the face of the speculative flood.
"Financial security deals directly with overall national economic and social stability and the fundamental interests of the people. Therefore, safeguarding financial security is the top priority among all financial affairs," Wang told an economic forum in the financial hub of Shanghai.
Wang said the government would take more measures to improve management of forex reserves, strengthen supervision of trans-border capital flows and crack down on financial crimes.
Days after Wang's remarks, on May 21, SAFE issued a notice ordering all banks in the mainland to file reports on all renminbi accounts opened by non-resident individuals and non-resident institutions.
SAFE said the measure was meant to "improve statistics on international payments".
According to SAFE, a new system that enables real-time monitoring of the flow of foreign exchange is in the pipeline. The system is mainly an Internet-based data exchange mechanism among SAFE, banks, enterprises and accounting firms.
SAFE also said it was actively seeking to strengthen administration of foreign exchange receipts and trade settlements.
Hu Xiaolian, SAFE administrator, said recently that it was necessary to check the authenticity of foreign investments and trading activities. By doing so, SAFE aimed to prevent inflows of "hot money" in the guise of FDI or trade.
China faced with a bigger challenge of guarding against the impact of short-term global speculative funds, Hu added, alluding to "hot money".