In 2014, foreign investors invested more than one trillion U.S. dollars into emerging countries. Of those inflows, 90 billion U.S. dollars came in the form of equity financing. On aggregate, capital inflows have helped may developing countries invest and grow, even despite the associated volatility they might entail. But we still do not know how those inflows are transmitted within an economy once they arrive.
Amid the robust recovery from the global economic and financial crisis, policymakers in East Asia are contending with two emerging challenges: rising inflation and surging capital inflows. The quickening of the pace of price increases would require further monetary tightening, but many officials and analysts worry that such tightening will help support further flows. On balance, central banks in the region seem to have been rather patient in raising p
Just as Asian economies started to recover from the global recession, policymakers and markets have started to worry about unwarranted asset price increases.
The question of whether China is overwhelmed by capital inflows has been asked for quite a while now. If a question continues to be asked, there is probably a good reason for it. Whether the answer is yes or no depends on how you look at it.