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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 129

China Business Intelligence No. 129

Samsung Economic Research Institute Beijing Office

Aug. 11, 2009

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Highlights:

I. Economy

China witnessed a massive exodus of hot money since the outburst of the global financial crisis in September 2008. The situation, however, recently reversed with a rush of hot money returning as the Chinese economy showed signs of improvement in the second quarter of 2009. The return of hot money has contributed to the expansion of credit loans and the rebound in asset values, thereby exerting a favorable influence on the Chinese economy. The inflow of hot money is expected to continue in the second half of 2009. To offset a decline in exports, the Chinese government will likely acquiesce and allow the influx of a certain level of hot money. However, if the influx of hot money expands too much, the government may strengthen its control to secure financial stability.

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