Analysts have estimated that China’s foreign currency reserves increased to $ 80 billion in January, 2008, mainly the result of capital income from Hong Kong.
During July 2005, when China’s government linked to the US dollar, China’s largest commercial exports and massive investment in the country increased yuan by about 16%. Experts have predicted that yuan appreciation will increase rapidly because Hong Kong investors are ready to stabilize profit.
As a result, for some time within the first half of this year, China is expected to begin revised foreign currency laws in an effort to control illegal capital income and at the same time one is expected to monitor capital income Implementing a comprehensive framework. Additionally, the Chinese government hopes the revised rules will improve the monitoring of illegal funds, to determine how much money is going on.
As regards to controlling the government’s economy, officials fear that capital income will create difficulties to control the components of some additional components of the economy, such as the property market.