In order to harshly crack down on the inflow of "hot money" and other abnormal cross-border funds, as well as to preserve the economic and financial security of the nation, since February 2010 the SAFE has launched a special campaign in 13 provinces (municipalities) with a relatively large volume of foreign exchange business to deal with and combat the inflow of "hot money." Well-targeted efforts were made to investigate and punish the inflow of "hot money" by major entities through the main channels. So far the current phase of the work, i.e., field inspections, has wrapped up by following a specified plan of action. A number of typical cases and entities involved in illegal foreign exchange activities have been uncovered and confirmed, with satisfactory results reached for the current phase of the special campaign.
During the special campaign, 3.47 million cases of cross-border foreign exchange transactions were examined through off-site inspections, involving a total of more than USD440 billion. So far 190 cases suspected of having violated foreign exchange regulations have been confirmed, involving a total amount of USD7.35 billion. Among these cases, 6 cases, involving more that USD27 million, have been closed. A number of other clues still need to be followed. Efforts have been made to further improve the inspection methods. In the off-site inspections during the early stage of the campaign in particular, comparison and analysis of supervisory data were conducted using electronic approaches to obtain relevant clues before further verifications were conducted in a well-targeted manner, thus ensuring smooth operations of trade and investment activities by most exchange-related entities.
It is preliminarily indicated by the data obtained from the special campaign that cross-border capital flows and foreign exchange receipts and payments are on the whole legitimate and in compliance with the relevant regulations, and no massive and intentional inflow of "hot money" has been discovered. Much of the inflow of "hot money" in breach of the regulations tends to be disguised by many smaller deals characterized by multiple channels and gradual infiltration. The major channels mainly involve traditional fields of trade and investment, such as trade, trade in services, foreign direct investment, banking, and individual transactions. It was discovered that a few commercial banks fail to strictly abide by the relevant regulations, and in some cases even accommodate the operating entities to evade foreign exchange supervision. In terms of the fields to which the "hot money" is headed, some hot money becomes involved in financing activities beyond the scope of business, and some flows into lucrative fields such as the real estate sector either directly or in a roundabout manner.
With regard to the next stage of the work, the SAFE will continue to inspect relevant clues for cases. Meanwhile, concentrated efforts will be made to ascertain cases in breach of the regulations, and to settle these cases in accordance with the law. As to new developments and problems surfacing during the inspections, proactive efforts will be made to enhance coordination with relevant departments so as to bring a supervisory synergy into full play and to enhance the relevance and effectiveness of the battle against the inflow of "hot money".