| Since 2003, especially the RMB exchange rate regime reformed in July of 2005, the RMB appreciated boom. Scholars at home and abroad predicted a lot of hot money inflowing into China, on the one hand ,waiting for RMB appreciation; on the other hand ,flowing into the domestic various investment marketing to get short-term profits. What channels did the hot money get through? How many did the hot money inflow? What did the hot money impact Chinese real estate market? How much did the hot money impact our country's monetary base issue, China's foreign exchange reserves, and stock marketing? How can we strengthen the supervision of hot money in the bud? Around these questions, form the content of the paper.This paper, first analyze the concept, characteristics and main body of hot money. The concept of the hot money there hasn't been universally accepted definition. Based on previous definition of hot money, I define and analyze hot money. There are many ways for hot money inflowing into host. The article combining of the current account, capital account and financial items analyze hot money getting into the host, of course, and there are hot money entry into the country illegally, such as through the underground. The computation methods on the hot money, according to foreign scholars'method of measuring capital flight, in theory, can be divided into three types: direct method, indirect method and hybrid method. The direct method is apt to be underestimated because of the narrow range scale. The indirect method estimate hot money amount of inflowing and outflow by adding and subtracting the rest of the four account in the international balance of payment. This kind of method often cannot reflect the hot money the international balance of payment in current account. Mixing method is a new algorithm combining indirect method and direct method, a compromise. This paper, using three kinds of methods, combining previous research results on hot money, estimates the size. Through analysis and comparison, conclude that trend is the same, only change inconsistently. This suggests that the scale of hot money in measure relevant to ways we choose. We choose suitable policy in according to our problems.Chinese real estate market because of high-speed development, high profit and good macro environment, attracts a lot of hot money. The hot money on real estate market has positive effect, also has negative, negative effect primarily. Empirical test concluded that: in the short-term the hot money and real estate market price does not keep stable relations. But in the long term, their relationship is stable. Through that causality test high prices will attract more hot money inflows domestic; But hot money inflowing cannot make house prices unlimited continuing to grow. These are a match to economic reality, and money may not make house prices keep improving. These are relevant to purchasing power and demanding.Large hot money inflows, mainly because of arbitrage and sharing capital market premium. By empirical test, we can conclude exchange rate is the main cause that hot money flows into China, followed by capital market yields, finally interest rate. The massive hot money inflowing,force the central bank to enlarge base currency,cause the proportion of foreign exchange to basic currency increasing rapidly in China, and this will weaken monetary tools effect for the central bank. Through unit root test, we get hot money and the number of basic currency is one-way causality. Hot money is the reason the central bank which put in more amount of currency to market, but the central bank put in more currency isn't because of hot money. It suggests that hot money doesn't play an important role for the central bank to put in more currency to market, and also shows that our years of trade surplus caused by foreign exchange is the main reason for the increasing foreign exchange combines. Hot money inflowing into Chinese inevitably leads to make foreign exchange reserves increasing. Foreign exchange reserve can't explain with trade surplus and the FDA and will bring economic instability. This article demonstrates hot money and foreign exchange reserves with the empirical test method. It concludes that the relationship between the scale of every $100 million of hot money inflowing, and foreign currency reserve rose by about 46 million dollar. Hot money is impossible to play its important role in Chinese foreign exchange reserve, even for non-precise data. It only shows that large hot money through illegal means channel, or hidden, but not real entry into the country of trade or investment entity economy. Stock market booms in 2007, so some scholars think hot money inflows stock market of our country. And then what effect will hot money have on capital market? Through empirical analysis, we conclude that hot money is really able to push stock index. But every $100 million stock index rising inflows, and push about 0.2 percentage points to the stock market, so the influence of hot money is not so important. This also agrees with what officials said. Finally, this paper expounds the countermeasures and suggestions to prevent hot money.First, I review the evolution course of capital controls. According to the control policy content and the control object changes, capital controls is divided into four stages. In the present stage, our country in capital controls exist many problems, which cause hot money to inflow or outflow. According to the analysis of hot money inflows channels, and I put forward corresponding countermeasure suggestions; Hot money that inflows is because of arbitraging, arbitraging and sharing capital market premium. We can be to market interest rate and expand the scope of floating exchange rate to eliminate hot money's inflows motivation and reach to purpose. In a crisis capital controls, namely we can increase the cost of movement of capital to prevent hot money, and we also can reduce the transaction to prevent hot money, and of course to strengthen international regulatory cooperation is very important. |
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