Analysis On The Estimation Of China's Short-term Capital Flow Scales And The Influence Short-term Capital Flow Exerts Over The Domestic Real Estate Market

Since the 1990s, along with the advent of global economic integration and the financial liberalization process, the international short-term capital flow has been expanding its size with a booming increase rate. This damages the global economy, especially developing countries with respect to their exchange rate regulations, monetary policies as well as the economic development. In particular, the 1997 Asian financial crisis, and in Turkey and Argentina around late 2001 and early 2002; to a great extent, they resulted from a massive accumulation of international short-term capital and adverse attack on the host country's weak capital and financial systems.China has witnessed a steadily increasing trend in short-term capital inflow due to the following factors: a 9% economic growth rate, the sustaining international trade surplus, the expectation of RMB approximation by international investors, and relatively stable politics and social security compared to other emerging economies.Based on the financial facts mentioned above, this article aims to establish a scientific and reasonable estimation system by summarizing and correcting the existing estimation methods on short-term capital flow size with the aid of related knowledge in finance. Furthermore, it emphasizes the analysis on the influence short-term capital flow exerts over the domestic real estate market. Finally, it draws the policy implications, both theoretically and empirically.This article includes four sections. Section one elaborates the significance of the topic, the materials it covers, the methodology and outline it employs, also it gives a brief literature review on short-term capital flow by domestic and foreign researchers. Section two mainly re-defines the international short-term capital and long-term capital. Moreover, there is a careful examination on international short term capital category, which is composed of four parts, such as speculative short-term capital, the value-storing short-term capital and so on in order to demonstrate the effects in real estate market the speculative short-term capital brings. Section three is one of the core contents here, by intensively analyzing the way short-term capital inflows and outflows China along with reviewing the estimation method by domestic and foreign scholars towards China's invisible short-term capital flow scales. The author proposed three corrections and extensions based on Klein Methodology, therefore it delivers a more complete and effective estimation over China's short-term capital flow scales between 1997 and 2006, simultaneously, it involves stage differentiation and analysis during the decade. Section four is developed under the recent massive entry in the domestic real estate market by speculative short-term capital. Through the descriptions on the channel and causes of the event, this article implements the combination of qualitative and quantitative methods, mainly showing the influence over our real estate market that the short-term capital flow exerts, and comes up with policy suggestions as to how to avoid and prevent the speculative short-term capital from attacking our real estate market.