Hot money' fuels inflation in China

A torrent of speculative capital is handcuffing China's efforts to fight inflation and casting doubt on its willingness to allow its currency to continue increasing in value — something U.S. manufacturers have long sought.Undocumented "hot money" is sneaking past China's official controls through a variety of channels, including phantom trade involving no real goods, and foreign companies padding investment receipts. Estimates vary as to how much cash has made its way into the fast-growing Chinese economy. Donald Straszheim, vice chairman of Roth Capital Partners in Newport Beach, Calif., pegs it at $162 billion in the first half of this year. Brad Setser, a former Treasury Department economist, says it could be up to $250 billion — about equal to Portugal's annual economic output.