China’s foreign exchange reserves continue to accumulate at a quite substantial pace in recent months, and the latest data show that “hot money” inflows may have accelerated. This and the recent currency market turmoil in other economies have led to an explosion of discussions and concerns about “hot money” in China. A wide range of estimates on the size of the hot money inflows have flocked to the public arena and alarm bells about possible large outflows rang loud. Just how much should China worry about “hot money” inflows and outflows? Here is what we think：
