| China, is a typical country with capital structural control. The restriction on long-term productive and constructive capital inflows, such as FDI, is easing. While for the short-term international capital, such as securities, our government always stays tight. Nevertheless, the speculative capital of China never stop flowing, even have large scale. In fact, current account convertibility leaves operational space for bypassing the capital control and naturally become the main hidden channel of the short-term international capital. The unbalance of bilateral trading data, the inflation of China’s trade surplus, the explosion of trade volume in the bonded area, these unusual phenomenon has implied that there are large-scale short-term capital flows under the trade account. Especially, the US subprime mortgage crisis pushed global economy into recession since 2008, while the trade volume of China still remained increasing. At the same time, the affairs about trade misinvoicing and fake trade occured frequently, the hot money problems got exposed. Scholars from home and abroad started to query the authenticity about China’s economy data. The question of short-term capital flows under the trade account had become a hotspot issue. Compare with general ways, these capital express more diversity and hidden, its size estimation is more difficult as well. Although current researches relate to short-term international capital flowing are numerous, micro-studies aimed at the trade account situation are still less, especially for the fake trade pattern, both on the quantity and quality. On the content side, they lack of the evidence from empirical analysis. On the estimation side, different scholars have different means.For all this, the main works of this paper are:(i) Focus on the different scenarios under the capital account open and the capital control, we systematically reviewed the literature that relate to the international short-term capital flow since the late 20 century, and specially concerned the questions about the effectiveness of capital control and international short-term capital flow under the current account, in the hope of providing useful reference for the researches in regard to flowing pattern, size estimation and effective supervision of China’s international short-term capital.(ii) Convert ideas to study, and start from the behavior motivation. Identify our research topics, Short-term Capital Interest Arbitrage under the Trade Account, and its scope. Based on the Covered Interest Rate Parity, this paper analyzes its theoretical motivation and then presents the practical operating procedures of trade misinvoicing and fake trade.(iii) Develop classic Trade Gravitation Model, then use it for testing how the phenomenon of short-term capital flowing under the trade account, which induced by the interbank offered rate difference variable, affect bilateral trade flows in the context of capital controls. And try to estimate its flows scale in the end. |
