Our Study Of International Short-term Speculative Capital Flows And Their Impact

In recent years, with the deepening of economic globalization, the international short-term speculative capital (also known as hot money) flow in and out and bring about negative impact constantly in our country. The international short-term speculative capital is huge and flow rapidly, on the one hand, attacks against our country’s economic and financial security, on the other hand also affects the effective implementation of China’s micro-economic policy and macro-economic policy, it even will cause the financial crisis. Now in our country, the financial system is still not perfect, and the degree of openness of the financial markets is not enough. We are lack of experience in the financial regulation and the ability of bearing and solving the financial turmoil. There is a big gap between our country and the developed countries in the world. So the research of mechanism and effect of the international short-term speculative capital flow is particularly important. Especially in2008, the U.S. subprime mortgage crisis triggered the global financial crisis, and then in our country, the international short-term speculative capital flow in and out more frequently than it in the past. How to control the international short-term speculative capital flows effectively is of great practical significance for maintaining China’s economic security. On the basis of the analysis of connotation of international short-term speculative capital flows, this paper summarizes the effect factors of the international short-term speculative capital flows in and out in our country as Policy factors and three economic factors:"interest arbitrage""exchange arbitrage""price arbitrage", and select the monthly data of the increase of China’s foreign exchange reserves, the trade surplus and the FDI, to measure the amount of international short-term speculative capital inflows from2002to2011. It uses the VAR model to analyze the link between the international short-term speculative capital flows and the factors, and through empirical study it concluded that the "interest arbitrage""exchange arbitrage" has a greater impact, the effect of the "price arbitrage" is not significant. Finally, this paper analyses the effect of the China’s international short-term speculative capital flows to the China’s economic and finance, and put forward some suggestions and countermeasures of how to make the effective supervision and control of the international short-term speculative capital flows in china.