China’s short-term foreign debt rose by 24% in the second quarter from the first quarter, state media reported, citing statistics released Saturday by the State Administration of Foreign Exchange. The sharp rise may be attributed to "hot money" inflows attempting to capitalize on what many anticipate to be a currency appreciation. It may also be fueled by lower borrowing costs in the US. In April, China’s banking regulators reduced the country’s short-term foreign debt quota for the year to stymie "abnormal" foreign capital inflows. Short-term debt accounts for roughly two-thirds of China’s total foreign debt, which rose by 16% to US$513.8 billion in the second quarter, though many analysts note that the nation’s foreign exchange reserves are multiples of this figure.
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