Throwing cold water on hot money

The Chinese economy has become very attractive to speculative hot money. But by allowing the yuan to rise strongly, the authorities cause doubts whether the challenge is handled in a proper and coordinated manner.

Despite the slowing of its economy in the first quarter, foreign capital has been flowing into China to cash in on yuan appreciation and relatively high interest rates.

It is difficult to calculate the exact scale. However, some indicators, such as its foreign exchange purchases and value of exports, cast light on the abnormal influx of capital.