After the hot money flows into China, it will first buy and hoard some commodities, such as real estate, at a low price, and then speculate, resulting in a sharp rise in commodity prices, and then sell them at a high price. At this time, many people often follow the trend, but after the withdrawal of hot money funds, buyers who blindly follow the trend will suffer heavy losses and break the balance between the total domestic currency and the total value. Refer to the following contents for details.

1. Hot money is also called hot money, or speculative short-term funds. The purpose of hot money is to spend as little time as possible in Qian Shengqian. It is only short-term speculative funds that flow rapidly in the market in pursuit of high returns. For hot money, China market is hot, but China has strict foreign exchange control, so hot money needs to flow into China through special channels.

2. The entry of hot money contributed to the false prosperity of the economy. Judging from the current situation in China, while betting on the expectation of RMB appreciation, hot money constantly seeks arbitrage opportunities in other markets such as real estate market, bond market and stock market, especially in the real estate industry. In recent two years, the real estate price in China has increased by more than 12%, especially in Beijing, Shanghai and other big cities, with an annual increase of about 20%.

3. The influx of hot money has increased the scale of foreign exchange, disrupted the normal operation of the financial system, and intensified the domestic inflationary pressure. In 2004, the investment in base money reached more than 660 billion yuan, and according to the calculation, the inflow of hot money was about 654.38+000 billion US dollars. Therefore, the inflow of hot money alone exceeds the annual base money, forcing the central bank to use a large number of central bank bills to forcibly write off in the open market, greatly increasing the operating costs of the central bank, and at the same time making the initiative of China's monetary policy decline continuously, increasing the pressure of inflation.

The inflow of hot money increased the pressure of RMB appreciation. As the inflow of hot money increases, the pressure of RMB appreciation increases. The outflow of hot money makes the economy fluctuate violently. If the hot money flows out quickly on a large scale, the market price with a large speculative atmosphere will fluctuate greatly, such as the rapid decline of real estate prices, bond prices and stock market fluctuations.