Economy
China to step up crackdown on hot money - SAFE
(Agencies)
Updated: 2010-05-06 16:51
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China will step up its crack down on capital inflows to prevent the worsening of "asset bubbles," said Wang Xiaoyi, deputy head of the State Administration of Foreign Exchange.?
China will increase monitoring and strengthen controls on speculative capital coming into the nation, which is accelerating, Wang said at the FX Week conference in Beijing today.
"As the global economy recovers, cross-border capital inflows will increase in 2010 because of yuan appreciation expectations, interest-rate differentials between Chinese and foreign currencies and domestic asset prices," Wang said. "China will prevent abnormal capital inflows from enlarging asset bubbles through in-depth analysis and precise crackdowns"
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Yuan forwards slumped for a fifth day, the longest losing streak in almost nine months, as Europe's credit crisis curbed demand for riskier assets and prompted speculation China will delay ending its currency peg. US Treasury Secretary Timothy F. Geithner and Secretary of State Hillary Clinton are scheduled to travel to Beijing on May 24-25 to take part in the second US- China Strategic and Economic Dialogue.
The SAFE on April 29 cut the nation's quota for short-term overseas borrowings this year to $32.4 billion, 1.5 percent less than in 2009, to ease inflows of speculative capital. Consumer prices probably climbed 2.7 percent in April, matching the level in February, which was the fastest pace in 16 months, according to the median estimate in a Bloomberg News survey. The statistics bureau is scheduled to announce the data on May 10.
