The central bank has vowed to step up controls on inflows of foreign capital, the latest sign that Beijing is concerned that speculative investments present a serious risk to the country's financial system.
'We will continue to strengthen the supervision of foreign exchange and effectively guard against an assault of short-term capital flows,' the People's Bank of China said in a list of tasks set for the second half of the year.
Total foreign exchange holdings grew by US$280.6 billion in the first half, far more than the combined total of inflows accounted for by the trade surplus and foreign direct investment.
This has led to fears that so-called 'hot money' betting on the appreciation of the yuan is flooding the mainland financial system, feeding excess liquidity and putting pressure on the banking system.
However, a former central bank adviser yesterday dismissed these concerns, arguing that much of the foreign capital chasing investment gains on the mainland should not be considered 'malicious'.
'Hot money is not wreaking havoc in China,' Li Yang, the head of the Chinese Academy of Social Sciences' finance research centre, told the People's Daily.