In February 2012, foreign-related receipts and payments of domestic banks on behalf of clients amounted to USD193.3 billion and USD179.6 billion respectively; and the surplus of foreign-related receipts and payments reached USD13.7 billion. For the first two months of 2012, the cumulative foreign-related receipts and payments of banks on behalf of clients amounted to USD376.5 billion and USD336.2 billion respectively, and the surplus of the cumulative foreign-related receipts and payments reached USD40.3 billion.

Annex: Glossary and relevant definitions

Balance of Payments refers to all economic transactions occurring between residents and non-residents in China , including all financial transactions and barter transactions resulting in changes in the assets and liabilities of residents and non-residents.

Foreign Exchange Settlement and Sales by Banks refer to settlement and sales conducted by designated foreign exchange banks for their clients or for themselves, excluding data on inter-bank foreign exchange market transactions. Foreign exchange settlement and sales by banks on behalf of clients (including foreign exchange settlement and sales by the banks themselves) refer to those conducted by designated foreign exchange banks for their clients. The time of conversion between the RMB and the foreign currency is regarded as the time-point for the statistics on the foreign exchange settlement and sales by banks. Specifically, foreign exchange settlement refers to the sale of foreign exchange to designated foreign exchange banks by owners of foreign exchange; foreign exchange sales refer to the sale of foreign exchange by designated foreign exchange banks to users of foreign exchange. The difference between the foreign exchange settlement and sales is regarded as an offset balance. Such differences, which will be offset by the banks through transactions on the inter-bank foreign exchange market, function as a major force resulting in changes in the country’s foreign exchange reserves. However it is not equivalent to the net change in the foreign exchange reserves during the same period.

The principle for transactions between residents and non-residents does not apply to the preparation of statistics on foreign exchange settlement and sales by banks on behalf of clients; such statistics only cover RMB and foreign currency transactions between banks and their clients, namely, exchange transactions between RMB and foreign currencies, which fall outside the category of the balance-of-payments statistics.

Contracts for Forward Settlement and Sale of Foreign Exchange refer to contracts for forward settlement (sales) of foreign exchange executed between banks and their clients through consultation, in which the foreign currency, amount, exchange rate, and term for the forward settlement (sales) of foreign exchange are agreed upon; where the foreign exchange is due to be received (paid), the foreign exchange settlement (sales) is to be handled on the basis of the foreign currency, amount, and exchange rate specified in such contracts. The forward foreign exchange settlement and sales business enables enterprises to lock in the exchange rate in advance for future foreign exchange settlement or sales and to effectively avoid the risk of changes in the RMB exchange rate. In general, the banks will hedge the risk exposure arising from the forward foreign exchange settlement and sales business on the inter-bank foreign exchange market. For example, where the total amount involved in the contracts for forward settlement of foreign exchange executed by banks is more than that of the contracts for forward sales of foreign exchange, the banks will generally sell an equivalent amount of foreign exchange in advance on the inter-bank foreign exchange market, and vice versa. Therefore, the forward settlement and sales of foreign exchange business is also a factor that affects changes in China ’s foreign exchange reserves.

Foreign-related Receipts and Payments by Banks on Behalf of Clients refer to  receipts and payment occurring between domestic non-bank resident institutions/individuals (collectively referred to as the “non-bank sector”) and non-resident institutions/individuals through domestic banks, exclusive of receipts and payments in cash and foreign-related receipts and payments by the banks themselves. In particular, they include cross-border receipts and payments between non-bank sectors and non-residents through domestic banks (including RMB and foreign exchange), and domestic receipts and payments between non-bank sectors and non-residents through domestic banks (temporarily excluding receipts and payments in RMB between domestic individual residents and domestic non-resident individuals). Statistics are collected at the time the clients conduct the foreign-related receipts and payments at the domestic banks. Specifically, foreign-related receipts of banks on behalf of clients refer to funds collected by non-bank sectors from non-residents via domestic banks; external payments by banks on behalf of clients refer to funds paid by non-bank sectors to non-residents through domestic banks.

Although the foreign-related receipts and payments of banks on behalf of clients are an integral part of the balance-of-payments statistics, the accounting method for the statistics, unlike the accrual basis of accounting required by the balance of payments statistics, is based on a cash basis. In addition, they merely reflect fund flows between non-bank sectors and non-residents, and do not include barter transactions and foreign transactions conducted by the banks themselves. The scope of the statistics on the foreign-related receipts and payments of banks on behalf of clients is smaller than the scope of the balance-of-payments statistics.