China’s Cold Eye on Hot Money

With China feeling the impact of large-scale inflows of short-term capital, the authorities have announced new rules aimed at controlling hot money and reducing external risks. But, while the regulations are essential to managing the renminbi’s rapid appreciation and ensuring the accuracy of trade data, will they be enough?

BEIJING – With China feeling the pressure from large-scale inflows of short-term capital, the State Administration of Foreign Exchange (SAFE) issued a notice in early May outlining a set of measures aimed at controlling “hot money” and reducing external risks. Indeed, the new regulations are essential to managing the renminbi’s rapid appreciation and ensuring the accuracy of trade data. But will they be enough?

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