Yu Yongding: China needs to keep a close eye on capital inflows

The 2011 Annual session of the World Economic Forum (Davos Forum) was held in Davos, Switzerland, from January 26 to 30th, and the theme of the 2011 Annual meeting was "common norms in the new situation".　　The four main topics of the annual meeting are: Responding to the new situation, economic prospects and formulating inclusive growth policies, supporting the 20 action plan and establishing a global risk response mechanism.　　 Around these issues, Sina Finance and Davos guests to open a dialogue, in advance for you to analyze the post-crisis era, the global common values and norms in all aspects of reconstruction issues.　　Zurich time January 26 evening (Beijing time January 27) news, before today, China's central bank adviser, senior researcher of the Chinese Academy of Social Sciences, Yu Yongding, said China should not only curb hot money entry, but also pay attention to normal channels of capital inflows, too much money inflow is not good for China. "China needs to clarify a concept that we have been very careful to curb hot money inflows, and we are encouraged by the so-called normal channel inflows, but now the difference between the two inflows is diminishing." For example, I buy shares in the Chinese market, you say this is hot money or not hot money? China does not need so much capital inflows.　　"he said. Such inflows, though not hot money, are not good for China, he said. China should not allow large inflows of foreign capital, no matter through which channels. He noted that the financing of some commercial banks could be financed domestically rather than internationally.　　Although commercial banks have their own considerations, the national macro perspective should be the case.　　Previously, Yu Yu, January 25, published a signed article in the China Daily, said that unless the EU think of a permanent crisis resolution mechanism, China should not buy government bonds directly to support the EU, or risk "lend your money" risks. Today, he told Sina Finance that the topic was not Davos by other economists. "These two days the European debt form slightly better, the market view to the European debt outlook slightly improved, so everyone did not continue to discuss."　　"But he thinks the problem for China is to reduce the purchase of foreign bonds rather than the bonds they buy." "China's problem is not with the bonds that have been bought, it is the inventory concept." The key is that the amount of new debt that is held every day needs to change. On the one hand, we are worried about whether the US government bonds we have bought can be repaid normally, while we are constantly increasing our holdings, which is a contradictory place.　　"he said.　　He pointed out that the first thing we need to do is to gradually reduce the regular trade surplus, reduce the further purchase of U.S. Treasury bonds; The second step is how to diversify the investment. "Our country has determined the policy of relying on domestic demand, under which the current account surplus as a percentage of GDP is falling, which is widely accepted; the difference is the speed at which the goal is achieved, and if you are not comfortable with US debt, accelerate the pace to achieve this goal." Another problem is how to get money out of capital projects, such as supporting infrastructure construction outside the region, increasing foreign direct investment, and appropriately increasingFinancial investment in the country. "When it comes to the internationalisation of the renminbi, Yu said that we want to use renminbi in trade settlement, but it depends on the wishes of Chinese and foreign companies." She suggested that if foreigners wanted to borrow from China, the debt would be a viable option in renminbi.　　The advantage for China is that other countries are borrowing money from China, so it certainly wants to do it in a devalued currency, which is appreciating. But he also cautioned that the internationalisation of the renminbi is a risky process. The United States is implementing QE2, and will continue to implement QE3, with low interest rates and poor investment opportunities, will lead to a large number of hot money will or has flowed into the developing countries. So China needs to pay close attention to hot money and other sources of inflows. (Jessie from Davos, Switzerland)