| The acceleration of the process of economic globalization and financialliberalization provides a convenient for the global-free-flowing of international hotmoney. With the high expectation of RMB appreciation and the rapid development ofChinese economy, a large number of international hot money flow into China. During thisperiod, Chinese real estate industry developed rapidly. Huge profit margins attracted alarge number of international hot money to flow into the housing market and carry onspeculative activities, which contributed to the rising prices of Chinese real estate market.Large-scale international hot money flowing into or out of Chinese real estate market willlead to the volatility of the price of the real estate market in China. However, the realestate industry is the leading industry and it has great influence in our country. Thevolatility of the price of the real estate market will seriously affected the healthdevelopment of Chinese macroeconomic and social stability.The transmission mechanism, by which the international hot money influences theprice of the housing market, is classified into direct transmission mechanism and indirecttransmission mechanism. The conduction effects include liquidity effect, extrusion effectand wealth effect. What’ more, from the condition of Chinese international hot money andthe Chinese housing market’ price in recent years, we find that, on the one hand, theinternational hot money promote the development of Chinese real estate market and therising of Chinese housing market’ price. On the other hand, the international hot moneyexacerbated the imbalance between supply and demand of Chinese housing market.We established an empirical model with four variables, which are the scale of theinternational hot money, the price index of Chinese housing market, the price index offirst-tier cities’ housing market and the price index of second-tier cities’ housing market.The variables are quarterly data from January2005to December2012. From theempirical point of view，we have made the study of the relationship between the flow ofinternational hot money and the fluctuation of Chinese housing market’ price. Throughthe study we find that international hot money has a significant impact on the prices ofChinese housing market. From the angle of city level, the impact on the First-tier cities’housing market is greater than the Second-tier cities. From the angle of Chinese housingprice we can find that, because hot money has the profit-driven, International hot moneyhas a positive impact on the low housing prices and a negative impact on the high housing prices. Therefore, our regulators should pay attention to the flexibility andrelevance of the policy when they make the regulations. And we should make effectivesupervision at hot money in the real estate industry and make sure Chinese housing priceskeep stably and prevent the housing bubble. |
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