It is clear that hot money does indeed pose a great challenge to a country's financial security, but one should also remember that financial risks are much more likely to be triggered by domestic economic events than foreign ones. That has been proven by the US's subprime crisis, and by Vietnam’s recent economic crisis.
In China the expansion of credit has led to excess liquidity in the market, which in turn has exacerbated inflation. This may well be the biggest problem for China's financial markets. When it comes to financial security assessment, China should put more effort into tackling domestic economic problems, rather than focusing on the issue of hot foreign money.
(Dongfang Daily by Li Huafang, translated for China.org.cn by Yan Pei, June 19, 2008)
