Through the trade channels of goods and services, hot money can flow into China in many ways.
1) False trade inflow: falsely reporting export trade by fabricating false contracts; Introduce hot money by underreporting imports and underreporting exports.
2) Early inflow and late outflow: by delaying payment and collecting money in advance, funds are intercepted to obtain time difference.
3) Inflated profits: refers to the repatriation of inflated overseas profits by enterprises with overseas business.
4) Fake export: There is still a large-scale export bill market in China, that is, by registering fake foreign trade enterprises, the verification forms of export receipts and payments are obtained and sold to enterprises and individuals without import and export rights. The out-of-control application and reselling of such foreign exchange verification forms have caused a large amount of hot money inflows.
2. Employee compensation and regular transfer channels
Employee compensation refers to the income earned and repatriated by China individuals working abroad (less than one year), as well as the wages and benefits paid to foreign employees in China (less than one year). The frequent transfer of workers' remuneration and items including remittance, free donation and compensation has also become an important channel for hot money to enter China. Recently, conditional donation has also become a channel for hot money inflows. For example, overseas institutions and individuals ask the local government to help them remit money while donating money.
3. Direct investment channels
China has always adopted the policy of attracting and encouraging FDI, which can be deposited in banks in cash or converted into RMB through banks. Foreign hot money can flow into China under the guise of FDI. For example, foreign group companies can introduce hot money by investing in domestic subsidiaries and convert it into RMB before investing in the domestic market.
4. Indirect investment channels
QFII: Although QFII is a legal channel for foreign capital to enter China A-share market, hot money can also flow into China through this channel.
Gambling difference: under the current system, China does not require the registered capital of foreign-invested enterprises to be equal to the total investment, and the insufficient part can be made up by foreign debt. This kind? Wrong bet? The foreign debt formed has gradually become a channel for hot money to flow in.
Foreign debts of foreign-invested enterprises: At present, foreign debts of foreign-invested enterprises mainly come from three aspects: first, foreign bank loans; Second, loans from foreign banks in China; Third, loans from foreign exporters, foreign enterprises and private individuals. The third is the main source of its foreign debt. Moreover, the foreign debts of foreign-invested enterprises are not guaranteed, and the indicators of international commercial loans are not strictly controlled, so hot money can flow into China through foreign debts.
5. Various illegal channels
Individuals bring RMB into the country in excess: According to Chinese regulations, the amount of RMB entering or leaving the country shall not exceed 20,000 yuan, and those who exceed the limit will be prohibited from entering or leaving the country. However, only those who carry more than RMB 654.38+10,000 will be fined. Therefore, if they enter and leave the country with RMB 254.38+10,000, the risk they are found is only to restrict entry and exit.
Underground banks: Financial companies in Hong Kong and Macao are representatives of underground banks. They are very familiar with international trade management and laws and regulations. Through various operations, they turned overseas hot money into seemingly legitimate investment funds and realized the inflow of hot money.
6. Legal loopholes
Foreign exchange mortgage loan: Foreign hot money first deposits funds in overseas branches of Chinese banks or foreign banks in offshore account, China, and then issues RMB loans in China with foreign currency deposits as collateral, thus realizing the inflow of hot money.
Personal foreign exchange quota: the foreign exchange quota of US$ 50,000 per person per year for mainland banks and the institutional arrangement of allowing Hong Kong banks to convert HK$ 20,000 into RMB every day and remit RMB 80,000 to mainland banks every day are two major legal loopholes for hot money inflow.