$210 billion trillion in mainland gambling on renminbi revaluation

Mr. Zhou, who works for a subsidiary of a large Hong Kong-funded company in Dongguan, saw what he had been puzzled about 2007 years ago: By purchasing raw materials, ordering products, and investing projects with subsidiaries, under different nominal contracts, the parent company based in Hong Kong continues to remit funds to the company's account,　　The parent company does not extract what is required for the order, even if the parent company's order product does not even produce its own company's factory. This time the renminbi is going to appreciate again. "Mr. Zhou has had experience.　　He judged that through the bank accounts of the mainland subsidiaries, the parent company would be able to accept the additional benefits from the renminbi appreciation. This is a common practice for many foreign companies to make gains in the past, and even some foreign-controlled joint ventures are carrying out similar arbitrage. It is noteworthy that these huge flows of funds in a short period of time through a variety of names into the mainland, the purpose is to sit on the proceeds of the renminbi appreciation process.　　According to Mr. Zhou, in the first round of appreciation of the renminbi since 2007, the parent company's money lay in the bank every year to earn 10% of earnings. In a way, this is another form of access to the mainland and a more covert approach to hot money. And more large-scale hot money hoarding troops in Hong Kong, the attack on Hong Kong property market, the stock market, the Chinese concept of speculation shares.　　Jechanzheng in and out of the Chinese market at a more unmanageable secret path and faster speed. On the other hand, the renminbi has continued to rise since September 9, when the RMB exchange rate exceeded 6.83. The pressure of RMB appreciation has increased unprecedentedly, under the current national conditions, the trend of RMB appreciation is unavoidable, and the impulse and pace of hot money arbitrage is accelerated.　　Asset bubbles are swelling again in the rising housing and stock markets, and the Chinese economy faces a new test. 200 billion dollars. The latest statistics from the central bank show that, as at the end of September, the balance of foreign exchange accounts for financial institutions was 18.54 trillion yuan, an increase of 406.8 billion yuan, and only 118.754 billion in August. Not only did the increase hit a new high this year, it also set the biggest one-month increase since last April. CICC, Japan Securities and other institutions issued a research report that, excluding the September trade surplus and foreign direct investment, the remaining 41.4 billion U.S. dollars in foreign exchange reserves can not explain the increase, and therefore judged this part of the money inflows into the hot money.　　A number of foreign research institutions, including Standard Chartered and Goldman Sachs, also reported in a recent report that the renminbi is expected to appreciate and that hot money is rapidly entering the mainland market.　　Since March this year, hot money has been coming in, unexplained foreign exchange reserve increases of 14.9 billion U.S. dollars, 36.2 billion U.S. dollars, 61 billion U.S. dollars, 25 billion U.S. dollars, 27.1 billion U.S. dollars, 13 billion U.S. dollars and 41.8 billion U.S. dollars, the current influx of hot money to the total of 219 billion dollars. According to the analysis, hot money seems to have a more convenient and fast path than ever before, whether from public or covert channels this year. From the open channel, first March, the Ministry of Commerce announced the decentralization of foreign investment approval authority to various places, then caused some expertsAbout the hot money direct false road FDI into the mainland market concerns; Subsequently, Shenzhen, Beijing, Shanghai and other cities have abolished real estate investment "limit order", not only in the speculation of the tenants of a considerable number of Hong Kong and foreigners Fry, some foreign capital and the mainland real estate enterprises, to project cooperation,　　Equity financing and other support for mainland housing companies to create a record of the king everywhere. A number of experts in June this year pointed out that 200 billion of dollars of hot money into the mainland has entered the mainland property market, the stock market.　　The pace of revaluation of renminbi assets, followed by expectations of renminbi appreciation, accelerated hot money inflows. In addition, Hong Kong's Hang Seng index hit a 14-month high of 22,318 points on a larger scale of international hot money, and Hong Kong's soaring luxury prices have topped the global record. Hong Kong's linked exchange rate is an unprecedented test. Hot money in the capital in and out of a free port Hong Kong ambush the stock market, the property market, the main goal is to revalue the renminbi, on the one hand, a considerable number of foreign investment enterprises into the mainland in Hong Kong with a parent company or global regional headquarters, in the process of RMB appreciation,　　Through the various nominal capital exchanges between parent subsidiaries or affiliated enterprises, the funds can be quickly entered into the mainland market, and then leave the field after quick gain. On the other hand, the operation of the Hong Kong market has become the main battleground for the operation of funds in the mainland due to the close ties and linkage between Hong Kong and the With the combination of liquidity, asset price trends and increased expectations of the renminbi, the study by the Institute of World Economics and Politics of the Chinese Academy of Social Sciences pointed out that hot money continued to flow into China in the second half of 2009 and even in the first half of 2010.　　The signal behind this is that the appreciation of the renminbi is expected and the pace is not reduced, hot money inflow. RMB appreciation multiple pressure hot money armies, RMB appreciation pressure unprecedented. Appreciation of the signal and trend has been presented: September 9 yuan exchange rate breakthrough 6.83 after a row of higher, September 18 renminbi exchange rate of 1 U.S. dollars against the renminbi 6.8271 yuan per month the highest. From September 1 to October 16, the dollar's 12-month forward exchange rate depreciated nearly 3% per cent, and the overseas market for non-principal delivery (NDF) in mid-October was a 14-month high for the future revaluation of the renminbi. The RMB ndf one-year contract has reached 6.6 basis points.　　Investment research institutions such as CIC believe that if the renminbi and the dollar arbitrage space recently rose to about 5%, this would be attractive to short-term funds. On the other hand, Western European countries in various public occasions to pressure the appreciation of the renminbi, G20 Pittsburg Summit, G7 Italy Summit and other international multilateral forums, the undervaluation of the renminbi and balance-of-payments imbalance became the focus of discussion. The United States, from both the official to the private sector, has put pressure on the renminbi to appreciate, first accusing China of manipulating its currency, and in August the Institute of International Economics published a report saying the renminbi trade-weighted effective exchange rate needed to rise at least 20% per cent and a 40% per cent appreciation against the dollar. Paul Krugman, the famous American economist, is nearThe New York Times issued a report accusing China of allowing its currency to depreciate, and even directly urging the US government to "take measures to deal with Chinese currency". Pressure, China's exchange rate system itself is facing the test, in the United States print banknotes caused by the depreciation of the dollar to hit the confidence of the dollar and China's large foreign exchange reserve position security threatened by the dual background, China's internationalization of the renminbi to break the road is imperative. Experts point out that to become an international currency and to assume the function of trade settlement, capital valuation and reserve currency in the world, it is necessary to change the "quasi-pegged" system, which is now pegged to the dollar, and become a free-floating currency. But the yuan's rise against the dollar will be more pronounced than the dollar.　　Although it is beneficial for a country's currency to become a strong currency in a certain trend, how to maintain the competitiveness of Chinese export products under the current situation of foreign trade export is the main factor to weigh the RMB appreciation. On the other hand, China from July launched the pilot renminbi Cross-border trade settlement of the smooth implementation of the current export system to obtain European and American merchants accept and recognition, the key is to make it enjoy the use of renminbi settlement benefits is to let the renminbi moderate appreciation.