More Myth-busting of the "reqian" China Story:
Here's a great peoples propaganda site...we'll use their "official" numbers:
english.people.com.cn
[" By the end of October, China had received a total of US$555.3 billion in FDI. "]
Foreign Direct Investment of $555.3 Billion is now 1/3rd of China's $ 1,600 Billion GDP.
But how that money is digested by the Chinese Economic System is quite another story:
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China
Local Govts Warned Against 'Hot Money'
Regulators have been playing down the amount and impact of speculative foreign investment over the past year, but the director of the State Administration of Foreign Exchange said there could be "no end of trouble in future" if local governments aren't made more aware of its risks.
china.org.cn
[ "Fake foreign investment' was used to speculatively purchase renminbi-denominated assets and commercial housing, he noted. These kinds of funds are called reqian, literally 'hot money,' in Chinese.
The foreign exchange administration found that people from overseas had bought dozens of apartments in coastal cities, some even more than 100, and that this was "obviously not for their own use," he said.
This kind of 'hot money' pushes housing prices to a very high level, making cities look prosperous, but does no good to the investment climate as it leads to higher living and business costs.
Typically, this means greater risks for local financial institutions, enterprises and even individuals. When the real estate bubble bursts, they will suffer huge losses, Guo explained.
Speculative investment also sneaked into China in capital accounts or based on no real trade, Guo pointed out." ]
...we know how the last "Hot Money" Bubbles ended.
Tic' Toc` |
