Hot money distorts China’s exports as speculators seek to cash in on yuan, rate reforms

China is seeing a resurgence of “hot money” seeking to cash in on the rallying yuan and record-high interest rates, contributing to distortions in its trade data as speculators move money through regulatory loopholes. The return of distorted trade figures is unlikely to be welcomed by the People’s Bank of China (PBOC), although it is facing a dilemma. It wants to keep the yuan from appreciating too quickly but at the same time has pledged to gradually free up its grip on the currency to encourage its global use. November exports rose 12.7 percent on-year, blowing past a Reuters poll that predicted 7.1 percent growth, but many analysts suspect the performance was inflated by speculators moving money into the country through fake trade transactions.

    

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