The growth in the funds outstanding for foreign exchange continued to slow down in June following a sharp fall in May, indicating that international speculative money is withdrawing from the country before they make a comeback, the China Business News reported Monday, citing data from the People's Bank of China (PBOC).
As of June, the funds outstanding for foreign exchange held by China's financial institutions increased by 117.15 billion yuan ($17.30 billion), and that was down 11 percent from the May's 131.56 billion yuan. The balance of the funds outstanding for foreign exchange hit 20.59 trillion yuan by the end of June.
Analysts said as the government continued its macro economic policies, the market had even stronger expectations of a slowing economic growth.
China had adopted even tougher policies to curb the overheated property market since April, and the A-share market continued to stagger at a low point, which may have triggered the overseas hot money to withdraw from China's market.
Meanwhile, the expansion of Europe's debt crisis also drove the short-term cross-border capital to leave emerging markets and back to US treasury market to seek shelter, according to analysts.
According to data from the central bank, China's funds outstanding for foreign exchange increased by 1.03 trillion yuan in the first four months of this year. At the end of April, the balance of China's funds outstanding for foreign exchange hit 20.35 trillion yuan.
But the growth in the funds outstanding for foreign exchange dropped sharply in May.
Zhang Ming, a researcher with the Chinese Academy of Social Sciences, pointed out that the outflow of international capital might be temporary, and a larger scale of short-term capital might flow into China's economy in the second half of 2010.
