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http://www.chinaknowledge.com/News/n...=16309&cat=FIN
ul. 7, 2008 (China Knowledge) - The State Administration of Foreign Exchange (SAFE) announced Thursday it will work with the Ministry of Commerce and the General Administration of Customs (GAC) to further tighten control on inflows of speculative capital or hot money into China. SAFE will electronically link three government departments from Jul. 14 onwards, to check foreign exchange receipts and export settlements.
SAFE said the new mechanism would help prevent speculative overseas money from flowing into the country under the guise of trade. Monitoring deferred payments for imports could also prevent possible outflows of capital from the country in the future.
After a trial period of one month, the system will be put in place from August 4.
Inflows of what is normally known as hot money are estimated at US$147.9 billion for the first five months of this year. According to analysts, as much as US$600 billion has flowed into the country as hot money since 2005. A large part of such inflows are brought in by over-invoicing exports, overstating foreign direct investment, and illegal banking channels.
SAFE said the new mechanism would help prevent speculative overseas money from flowing into the country under the guise of trade. Monitoring deferred payments for imports could also prevent possible outflows of capital from the country in the future.
After a trial period of one month, the system will be put in place from August 4.
Inflows of what is normally known as hot money are estimated at US$147.9 billion for the first five months of this year. According to analysts, as much as US$600 billion has flowed into the country as hot money since 2005. A large part of such inflows are brought in by over-invoicing exports, overstating foreign direct investment, and illegal banking channels.
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