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Investors are pumping money into China and into commodities.... betting on the run-up on the currency and better deposit rates than elsewhere. What is the problem with too much cash flowing in? And what are the consequences if they were to be pulled out?
This is funny... China is afraid of foreign investments because of what THEY are doing to America... If they want to restrict investments like that, should we not do the same in America? That is unless our politicians have been bought with Chinese money from our "domestic" companies...
I don't think China is worried about FDI that is going toward fixed assets (such as buildings, infrastructure, R&D, etc.). I think they're more worried that a lot of the FDI coming in are speculation bets on their currency and taking advantage of their interest rates. I think what they're afraid of is money that sits in as deposits and then get's withdrawn fairly rapidly as it moves on to the next "great" investment.
I guess you can say it happened here with "investors" who bought the mortgage backed securities and fueled the housing boom. But now, as the investment "sours" have fled and are no where in site. As we all know a drying up of credit/investments can create havoc on a country.
China is trying to avoid the same.
I think the right kind of FDI is great, and if we can get more coming back here and into production, innovation, and R&D that would help out our economy. Sadly, most FDI coming in is to take over assets, and not create new ones.
-chuck22b
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