Some problems have been found in regard to overseas capital inflow to China, according to an ongoing investigation by the State Administration of Foreign Exchange (SAFE), the official Shanghai Securities News reported Wednesday, quoting an official with the SAFE.

The investigation is mainly to uncover the channels, amounts, whereabouts and other information related to foreign capital inflow, said Sun Lujun, deputy director of the Capital Account Management Department of the SAFE.

Preliminary conclusions have been reached, and final results will be published later, Sun said, without disclosing the exact problems found.

The SAFE had said in March a special survey would be carried out across 13 provinces and cities with relatively large amounts of foreign currency transactions in the first half of this year.

The survey was mainly to target international balance of payments transactions and cross-border capital inflow under the accounts of goods trade, service trade, individuals, foreign direct investment and foreign debt.

Last year the government cracked down on 11 illegal private banks, together with other cases of illegal foreign exchange deals, involving more than 30 billion yuan (US$4.39 billion), the SAFE said in February.

Sun said it is hard to confirm that there has been a huge inflow of hot money, as hot money lacks a firm definition.

Sun also disclosed that the SAFE will loosen restrictions on overseas financing guarantees, in a bid to solve the problem of a lack of follow-up funding facing overseas investment enterprises.

Rising expectations of an appreciation of the yuan and interest rate hikes have prompted estimates that a large amount of hot money has been coming into China.

There has been nearly US$40 billion in short-term capital inflow in the first quarter, Zhang Bin, a researcher at the Chinese Academy of Social Sciences, estimated in a recent research report.

Though the figure is roughly equal to that in the fourth quarter of last year and is not likely to put particular pressure on monetary authorities, the interest rate differential between the dollar and the yuan will hardly narrow, spurring short-term capital inflow, as speculation rages over appreciation of the yuan, Zhang said.

The yuan will begin to resume its appreciation against the dollar in the second quarter of the year, and the central bank will widen the yuan's daily trading range, Standard Chartered Bank economists led by Wang Zhihao forecast Tuesday in a research report.

The consumer price index (CPI) growth rate in March has been higher than the benchmark one-year deposit interest rate of 2.25 percent for a second consecutive month.