The SAFA said on Friday in a statement that the short-term accounts for 60.3 percent of the total foreign debt, amounting to $236.7 billion, with an increase of 88 percent, or $18.97 billion by the end of March. While the medium and long-term debt rose by $2.3 billion in the first quarter to $155.9 billion, making 39.7 percent of the total foreign debt.

Guo Tianyong, economist of the Central University of Finance and Economics explained “the increase in the proportion of the short-term borrowing may be related to the speculative hot money inflows,” “although the short-term borrowing look like normal debt, as it is included in the official statistics, the capital can be used for some speculative purposes”.

Guo also explained that official statistics show that China’s foreign currency lending has been rising in recent months, which is the main reason for the continual increase in short-term borrowing. Some banks, especially foreign ones, have borrowed from overseas to lend to domestic enterprises. “Some of the lending may be used for speculative purposes”.

As the yuan has kept appreciating, the speculative capital is estimated to flow into China in a accelerated pace, the total amount of which could be the same as China’s foreign exchange reserves.