China's impromptu raising of its deposit reserve rate Thursday dragged down both its own and Taiwan's stock markets, despite the fact that all countries have put eased credit policies in place to prop up their economies in the wake of the economic crisis. The main reason for China doing so was its hope of tightening its money supply to fend off inflation. From past experience, an economic expansion period lasts for about 10 years and the bubble built upon the dreams in the initial and middle stages will eventually burst in the final stage after EPS ratios of company stocks inflate to a high level. The dot com bubble of 2001 is a classic example of this. Now, however, a wild movement of speculative capital does not need that reason to build dreams and make substantive investments before flowing into a country. Taiwan's central bank has also sensed the seriousness of the issue and has taken some action to restrict the inflow of hot money, but with limited effect. Speculators target Taiwan not for the country's benefit but rather to make profits from a low-risk Taiwan amid improved cross-Taiwan Strait ties. An ongoing hot money influx from around the world is creating a repeat of Hong Kong's experience in Taiwan. In the face of this big gambling game, how should Taiwan position itself? Make a commission or bet on the game to make lots of money? Obviously, these are not good ways for Taiwan to deal with the situation. Finding ways to lure the hot money into Taiwan's industrial upgrading or innovation is an issue that should be investigated by the government. (Jan. 16, 2010) 