China cracks down on inflows, slams QE (Forex regulator gets tough with China-bound hot money)

Marketwatch ^ | 11/10/2010 | Chris Oliver

[WebFocus]

China announced new measures Tuesday to curb inflows of foreign speculative capital, as senior government officials stepped up criticism of excessively loose monetary policies abroad, such as those of the Federal Reserve.

The State Administration of Foreign Exchange (SAFE) said in a statement it will strictly control its financial institutions’ quotas for the use of short-term foreign debt.

The nation’s foreign-exchange regulator also said it will tighten its oversight of funds shipped home by Chinese companies operating abroad, as well direct investments into China by foreign investors.

The news measures echoed a statement Friday by People’s Bank of China Gov. Zhou Xiaochuan, who said China could use capital controls to curb speculative inflows.

Zhou cautioned that China faced a difficult challenge in keeping out speculators because of its relatively high interest rates and expectation of gains in the value of the yuan.

More QE2 anger

Tuesday’s announcements were accompanied by fresh criticism from Beijing officials of loose monetary policies abroad and consequent risks in emerging markets.

Chinese Finance Minister Xie Xuren blamed excessively loose monetary policies by issuers of major currencies as compounding fiscal and debt risks.

The comments, made during a meeting with a delegation of British trade representatives, including U.K. Chancellor of the Exchequer George Osborne, appeared to be thinly veiled criticism of the Federal Reserve’s latest quantitative easing moves.

[Nervous Tick]

I have a suspicion that the Chinese will succeed where the citizens of the US have, unfortunately, failed: they’ll bitchslap some common sense into Helicopter Ben’s pointy little head.

[bigbob]

and the US government responds....how...??

[KeyLargo]