China has identified an inflow of illegal foreign hot money of roughly US$7.3 billion since it launched a nationwide crackdown campaign in February to combat the influx of speculative foreign capital, according to a report on the web portal Sina.com.

The State Administration of Foreign Exchange (SAFE), the country's foreign exchange regulator, issued a statement Tuesday on its website summarizing the findings of the three-month investigation into cross-border money flows in 13 provinces and municipalities.

SAFE said cross-border money flows and international balance-of-payments in China have followed foreign exchange law and regulations in general, and at present the country is not facing a large influx of hot money.

But SAFE said there were small-scale inflows of speculative funds into the property sector. This illegal foreign capital has entered China through channels such as trade, goods and services, and foreign direct investment. Some commercial banks have been found to have violated relevant regulations or even "aided" foreign hot money evading supervision by SAFE.

SAFE has identified some 190 cases in which foreign hot money has entered China, with more than US$7.3 billion involved. The agency has settled six such cases that involved US$27 million.

China has fallen victim to an increasing inflow of foreign funds because of potential lucrative returns coveted by international speculative money under a number of conditions such as China's relatively quick recovery from the global recession and the strong market expectations for yuan appreciation.

(CRIENGLISH.com May 26, 2010)