In the first half of 2011, the foreign exchange authorities maintained tough measures against hot money, investigated 1,865 cases involving violations of foreign exchange laws and regulations, and imposed relevant penalties of more than USD16 billion, an increase of 26.2 percent and 26.9 percent respectively over the same period of the last year.

With respect to the current key channels and typical methods of inflows and settlement of illegal and irregular foreign exchange funds, the foreign exchange authorities have further improved inspection methods, comprehensively promoted the use of an off-site foreign exchange inspection system, implemented multi-dimensional monitoring of the foreign exchange receipts and payments of various market players, and continually improved the accuracy of cracking down on activities in violation of the foreign exchange laws and regulations. In the first half of 2011, the foreign exchange authorities in different localities carried out special inspections of over 80 items, investigated a number of major cases occurring in Guangdong , Shanghai , Jiangsu , Shandong , Guangxi, and Hainan , and imposed relevant penalties. During the inspections, the foreign exchange authorities strictly carried out law-based administration, adhered to implementing legal procedures and imposing appropriate penalties, as well as energetically facilitated the legitimate operations of enterprises. As for the investigations and penalties, the total amount of administrative penalties and confiscations imposed by the foreign exchange authorities in the first half of the year was RMB260 million, exceeding that for all of the last year (RMB243 million).

Among the penalized activities in violation of the regulations on foreign exchange administration of financial institutions, the following activities are relatively common: exceeding the short-term external debt quota, handling foreign exchange settlement and sales in violation of the regulations on foreign exchange administration, handling receipts and payments under the capital account in violation of the regulations on foreign exchange administration, and failing to carry out reasonable examinations and verifications of the authenticity of the receipt and payment instruments under the current account. The former three irregular activities involved a total of USD9.27 billion, accounting for 57.9 percent of the entire amount involved.

Among the penalized activities of enterprises in violation of the regulations on foreign exchange administration, the following are the most common: first, changing without approval the use of foreign exchange or the RMB funds from foreign exchange settlement, second, activities in violation of the regulations on external debt administration, and third, activities such as remitting foreign exchange to China in violation of the regulations on foreign exchange administration or illegal foreign exchange settlement. The above three irregular activities involved a total of USD2.51 billion, accounting for 15.7 percent of the entire amount involved.

Facing the complicated economic situations both at home and abroad, the foreign exchange authorities will continue to rigorously crack down on irregular cross-border capital flows, with special focus on seriously combating the inflows of hot money, further improving inspection methods, and intensifying the investigation and punishment of major cases. Furthermore, the foreign exchange authorities will strengthen coordination and cooperation with the relevant regulatory authorities, give full play to the role of the relevant coordination mechanisms, and create a synergy for dealing with and cracking down on hot money.