Study On Effect Of Hot Money To China’s Modern Service Industry

Since the global financial crisis that initiates by USA in 2008 begins to spread within world range, the world economic landscape has also experienced from boom to bust now recovery phase. With the changing of economic situation, international hot money is also constantly transferred between capital market such as real estate and stock market,and part of the entity industry, which leading to the growing turmoil in the capital markets. If unchecked,it could cause a crisis again.Since China joined the world trade organization, scope and extent of communication with other Member States are constantly deepened,whether it is in the area of logistics and trading or finance. In the process of this development, International hot money is gradually flowing into the domestic market. At present, the domestic scholars’ research of the hot money flows are mainly concentrated on the analysis of its impact on China’s liquidity, then the impact on domestic capital markets, which hinders the long-term stable development of China’s economy.At the present time, the third industry output value has exceeded the secondary industry,has become a new pillar of China’s economy. In this paper, based on the economic transformation and upgrading, underthe background of service economy era is coming, considering modern service industry is at the forefront of development and innovation, and is the focus of modern real economy, essential to Chinese industrial structure optimization and upgrading, however, whether the massive inflows and outflows of hot money will affect their normal development?China’s modern service industry started late, development is lagging behind, depth, breadth and flexibility of the industry are not ideal, but the market is large and has great potential for development, has a certain appeal for hot money. So if the hot money have an impact on it, what impact would be like? In order to answer these questions accurately and clearly, this thesis analyzes the impact of hot money to the modern service industry through the capital market from both theoretical and empirical perspectives, and points out that impact of hot money on the modern service industry are mainly manifested in that most of hot money flows into the capital markets, and the stock market and real estate market have a more significant impact. The paper elaborates on some mechanism of capital markets on the real economy, so as to explain the impact of hot money to the modern service industry through the capital market, and according to our country’s present situation of modern service industry,combining relative theories and empirical analysis conclusion of this paper, this thesis puts forward countermeasures and suggestions about how to treat the influx of hot money.At first, before researching on influencing factors of hot money to China’s modern service industry, this paper starts by browsing a lot of literatures both here and abroad about transactions between hot money and modern service industry, through learning and experience, combined with this paper on specific issues, this paper is concerned with the definition of the concept and the scope involves effectively, through the study of these two aspects analysis concludes that the effecting ways of hot money to China’s modern service industry, mainly through capital markets function properly. After that, does further analysis of the flow direction of hot money flowing into China market, and analyses in details on the effect of hot money on capital markets, pointes out that hot money mainly flows into property and stock markets, a fact that in our country.Secondly, using the existing calculation method, by collecting data,the paper calculates the scale of hot money flowing into China in recent years. Then on the basis of the theory in this paper, by using econometric method, the paper empirically tests the impact of hot money on modern service industry.Then, according to all the above research results, this paper points out that the development of capital market has a positive correlation with the development of modern service industry, but because of the high amount of China’s modern service industry, hot money has not too great influence on the total of modern service industry, it mainly affects theproperty market and the stock market of modern service industry. Lastly,according to the conclusion of this paper, the paper puts forward the effective countermeasures and suggestions on how to guide and monitor the flowing situation of hot money in China.