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China's "Hot Money" Problems (CRS Report for Congress)

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Release Date July 21, 2008
Report Number RS22921
Report Type Report
Authors Michael F. Martin and Wayne M. Morrison, Foreign Affairs, Defense, and Trade Division
Source Agency Congressional Research Service
Summary:

China has experienced a sharp rise in the inflow of so-called 'hot money,' foreign capital entering the country supposedly seeking short-term profits, especially in 2008. Chinese estimates of the amount of 'hot money' in China vary from $500 billion to $1.75 trillion. The influx of 'hot money' is contributing to China's already existing problems with inflation. Efforts to reduce the inflationary effects of 'hot money' may accelerate the inflow, while actions to reduce the inflow of 'hot money' may threaten China's economic growth, as well as have negative consequences for the U.S. and global economy. This report will be updated as circumstances warrant.