The Asian Development Bank warned Tuesday that China could risk becoming the "next Vietnam", suffering a sudden outflow of short-term speculative funds when the current global turmoil subsides.
"One of the big factors is movement in international capital. Many are concerned that China will become the next Vietnam," said Jian Zhuang, a senior economist with the ADB.
"Hot money will rush into China because the Chinese economy is relatively stable but the risk is when the (global) situation stabilises, all the funds will flow out again. This will create a huge shock for China's financial system."
Speculative funds have been blamed for a recent spike in Vietnam's inflation, which hit 28.3 percent year-on-year in August.
The ADB on Tuesday issued its Asian Development Outlook 2008 update, maintaining a forecast of 10 percent growth for China's economy this year.
However, it lowered previous expectations for Chinese economic growth in 2009 to 9.5 percent from 9.8 percent, on a slowdown in exports and investments.
