Need to distinguish capital outflows from capital flight

Caixin: Does the central bank have an estimate of the magnitude of "hot money"?

Mr Zhou: We have observed that some export enterprises, affected by expectations, make decisions accordingly on whether and where to convert foreign exchange into RMB and whether to delay such conversions, conduct forwards transactions to mitigate forex risks, adjust the time of investment and bring forward the purchase of foreign exchanges.

These actions influence the supply and demand in the foreign exchange market.

A large number of domestic enterprises that have overseas subsidiaries can choose to put their money either at home or offshore more easily than before. But export enterprises need RMB funds to pay for wage, utilities, raw materials and spare parts. Such adjustment strategy thus has an ending. This also applies to import enterprises…