Seeing the temporary weakness of China’s economy, the international hot money, which has gained too much from China, is waiting for a chance to withdraw.

Because of the continual drop occurring to stock and real estate market in Mainland China, the market prosperity keeps in a low state. Recently the exchange rate of Renminbi for US dollar also suffers incessant back fall. Therefore, the international hot money, which is always sensitive, senses the change of the situation and, with the belief of quitting when being ahead, waits for the chance of withdrawal from the market of Mainland China.

The signal showing the withdrawal of the international hot money comes from a copy of statistical data. In June, the increase of foreign exchange reserve of Mainland China was only 11.9 billion USD. Minus the trade surplus of 21.35 billion USD of that month and foreign dealers’ direct investment of 9.61 billion USD, the increase of foreign exchange reserve of June was negative 19.06 billion USD. The capital flow in June was net outflow. This was the first time that the capital outflow of Mainland China becomes negative from the year of 2005.

The market experts think that the outflow of the international hot money is not haphazard. After all currently there is no signal showing the resurrection of the stock and real estate market of Mainland China. And it seems that since July the exchange rate of Renminbi has begun to change the trend of unilateral rise starting from 2005. After the historic high of 6.8128 of Renminbi for US dollar on July 16th, the central parity rate till August 15th was 6.8649. The benchmark of Renminbi had fallen 521 base points in only one month.

For the international hot money which has gained enough paper profit, this is undoubtedly a kind of signal of quitting when being ahead. According to a report from China Times, a senior investment manager of a foreign funded bank in China made an appeal in their interior conference: “The income we gained in China has already reached or even exceeded our expectation. Time to Withdraw!”

Li Youhuan, a professor of economics in Guangdong Academy of Social Sciences and expert in hot money of Mainland China, pointed out that the situation that the offshore capital kept flowing into Mainland China for consecutive 4 months had ended since June. The main route, through which hot money flows in, is represented by the coastal underground private banks in Guangdong province. Judging from the main route, the international hot money maintained the wait-and-see attitude after the Wenchuan Earthquake on May 12th.

Mr. Li said: “Because of the complicated domestic and foreign factors, foreign capital is cautious to the trend of China’s economy after the Olympic Games. It is probable that hot money will withdraw from Mainland China, keeping the profit gained in China in a secure state and withdraw without any loss in that way. It also tries for a way of cash-in before the appreciation period of Renminbi faces reverse.