The State Administration of Foreign Exchange (SAFE) held a press conference on the foreign exchange receipts and payments for 2016 at the State Council Information Office on Thursday, January 19, 2017 at 10 am, and answered press questions.
· Xi Yanchun, the moderator:
Good morning, ladies and gentlemen. Welcome to the press conference of the State Council Information Office. Today, we are very glad to have with us Ms. Wang Chunying, the press spokesperson of the SAFE, and she will unveil the data on foreign exchange receipts and payments for 2016 and take your questions. Now let's invite Ms. Wang Chunying for some opening remarks.
2017-01-19 10:00:55
· Wang Chunying:
Good morning, ladies and gentlemen. Welcome to today's press conference. I would first like to release China's foreign exchange receipts and payments for 2016 and then I will be taking your questions.
In 2016, the global economic recovery was slow still, and the global financial markets fluctuated more violently. China's economy grew slowly but steadily and showed promising prospects, and was operating within a reasonable range. The SAFE coordinated the relationship between promoting trade and investment facilitation and guarding against cross-border capital flow risks, in a bid to safeguard the balance of payments and the national economic and financial security. Overall, the pressure from cross-border capital outflows facing China was relieved to some extent in 2016.
2017-01-19 10:01:22
· Wang Chunying:
According to banks' foreign exchange settlements and sales, banks settled foreign exchange of RMB 9.55 trillion (USD 1.44 trillion) and sold RMB 11.80 trillion (USD 1.78 trillion) in 2016, representing a deficit of RMB 2.25 trillion (USD 337.7 billion). The data on banks' foreign-related receipts and payments for customers show that banks' cumulative foreign-related receipts amounted to RMB 18.55 trillion (USD 2.79 trillion), and their external payments hit RMB 20.57 trillion (USD 3.10 trillion), representing a deficit of RMB 2.02 trillion (USD 305.3 billion).
2017-01-19 10:03:18
· Wang Chunying:
In 2016, China's foreign exchange receipts and payments presented the following features:
First, there were deficits in banks' settlements and sales of foreign exchange, and in foreign-related receipts and payments. In 2016, banks' settlements of foreign exchange in dollar terms dropped by 17% year-on-year, and their sales of foreign exchange, 19% year-on-year, leading to a deficit of USD 337.7 billion; and banks' foreign-related receipts fell by 15%, and their foreign-related payments, 11%, resulting in a deficit of USD 305.3 billion.
Second, the pressure from cross-border capital outflows for the four quarters was lower than that of the beginning of 2016. According to the data on banks' foreign exchange settlements and sales, the deficit peaked in the first quarter at USD 124.8 billion, then fell to USD 49 billion and USD 69.6 billion in the second and third quarters respectively, and hit USD 94.3 billion in the fourth quarter, 24% lower than the first quarter and down by 43% year-on-year. Banks registered deficits of USD 112.3 billion, USD 56.5 billion and USD 85.5 billion respectively in their foreign-related receipts and payments for customers in the first three quarters, and the deficit dropped to USD 51 billion in the fourth quarter, the lowest record of the year.
2017-01-19 10:04:28
· Wang Chunying:
Third, the foreign exchange sales rate dropped and enterprises' solvency process slowed down, while their demand for financing picked up. In 2016, the sales rate that measures the willingness to buy foreign exchange, or the ratio of foreign exchange purchased by customer from banks to the customer's foreign-related foreign exchange payments was 74%, down by 8 percentage points year-on-year. The ratio was 80%, 74%, 70% and 72% respectively in the four quarters, primarily because fewer enterprises bought foreign exchange to repay foreign exchange financing. Accordingly, banks' outstanding domestic loans in foreign exchange fell by USD 35 billion, USD 23.4 billion, USD 12 billion and USD 15.1 billion in the first through fourth quarter of 2016. Since March 2016, importers' balance of cross-border financing denominated in foreign currencies such as refinancing and forward L/C had gone up on a monthly basis and risen by a cumulative USD 42.5 billion as at the yearend.
Fourth, the foreign exchange settlement rate fluctuated and the foreign exchange deposits held by Chinese enterprises and individuals in China were on the rise. In 2016, the foreign exchange settlement rate that measures the willingness to settle foreign exchange, or the ratio of the foreign exchange sold by customers to banks to the customers' foreign-related foreign exchange receipts was 59%, down by 9 percentage points from 2015, indicating that enterprises and individuals preferred to retain foreign exchange receipts. From the first to the fourth quarter of the year, the foreign exchange settlement rate was 59%, 63%, 59% and 57% respectively. In 2016, the balance of the domestic foreign exchange deposits of Chinese banks rose by USD 60.4 billion, up by USD 48.8 billion year-on-year.
2017-01-19 10:06:11
· Wang Chunying:
Fifth, banks' deficit in forward settlements and sales of foreign exchange contracted from the level of 2015. In 2016, the number of clients contracting for forward foreign exchange settlement with banks was down by 47% year-on-year, while that of clients contracting for forward foreign exchange sales with banks was down by 52%, representing a deficit of USD 84.9 billion, down by 56%. In particular, a deficit of USD 36.3 billion was registered in the first quarter, and narrowed to USD 800 million in the second quarter, but rose to USD 21.1 billion in the third quarter, which, however, contracted by 79% year-on-year. In the fourth quarter, a deficit of USD 26.7 billion was posted, consistent with the same period of 2015.
These are the major data on the foreign exchange receipts and payments for 2016 I would like to unveil. Next, I will be taking your questions.
2017-01-19 10:09:37
· Xi Yanchun, the moderator:
Many thanks to Ms. Wang Chunying. Next we will move into the Q&A session. As usual, please tell us what news agency you are from before raising your questions.
2017-01-19 10:12:27
· CCTV:
Mr. Donald Trump will take office tomorrow. I am wondering what the new trends are in recent cross-border capital flows. You said just now that the pressure from cross-border capital flows were relieved throughout 2016, but could you brief us on the latest trends? What changes will take place in 2017? Thank you.
2017-01-19 10:13:09
· Wang Chunying:
Thank you for your questions, which have drawn wide concern among people. At this juncture, it is likely that everyone is anticipating what the future holds, such as what new changes will take place to the US policies and what impact the execution will have on the future. First of all, China's cross-border capital flows improved over the past year, as shown in the statistical data on foreign exchange receipts and payments released just now, especially in the major indicators of foreign exchange situations such as foreign exchange reserves, banks' foreign exchange settlements and sales, and their foreign-related receipts and payments for customers.
2017-01-19 10:14:30
· Wang Chunying:
First, the balance of foreign exchange reserves was stabilized. In 2016, the balance of foreign exchange reserves dropped by USD 319.8 billion, much lower than that of 2015. The balance of foreign exchange reserves fell by USD 107.9 billion in December 2015, and went down further by USD 99.5 billion in January 2016, but contracted significantly afterwards, and even picked up in some months. As the USD exchange rate has appreciated rapidly since October 2016, the US Dollar Index rose by 7.1% in the fourth quarter, leading to tremendous changes to the book value of foreign exchange reserves arising from the foreign exchange conversion factors. Nevertheless, foreign exchange reserves fell more slowly than they did at the beginning of the year. Second, the deficits of banks' foreign exchange settlements and sales, and their cross-border foreign-related receipts and payments for customers contracted. In December 2015 and January 2016, a deficit of USD 89.4 billion and USD 54.4 billion respectively was registered under banks' foreign exchange settlements and sales, and a deficit of USD 72.5 billion and USD 55.8 billion respectively was recorded under foreign-related receipts and payments. The deficits had shrunk since February 2016. Alongside the strengthening of the US exchange rate, the deficit in foreign exchange settlements and sales went up to USD 46.3 billion in December, which was much lower than the level at the end of 2015 and the beginning of 2016; and a deficit of USD 12.3 billion was registered under foreign-related receipts and payments in December, which was low compared with other months in the year.
2017-01-19 10:23:20
· Wang Chunying:
China's cross-border capital flows have recently undergone some positive changes in structure, with domestic players adding outbound investments while foreign players' investments in China have converted from net outflows into net inflows, which was evident in the Balance of Payments. A key indicator of a country's cross-border capital flows usually is the financial account in the Balance of Payments that excludes reserve assets, which is indicated as the non-reserve financial account in China's Balance of Payments. From the second half of 2015 to the first quarter of 2016, net outflows were recorded under the credit account and debit account of the non-reserve financial account. The net outflows under the debit account mean outbound investments by domestic players, while the net outflows under the credit account mean domestic players are servicing external debt, and under this circumstance, the capital outflow pressure was heavy. Since the second quarter of 2016, net outflows still have been registered under the debit account of the non-reserve financial account, while net inflows have been recorded under the credit account, representing a positive change that shows the capital outflows from China are the external investments made by domestic players, including ODI, securities investments and external loans. On the other hand, this shows that after a period of external debt servicing, net inflows have begun to be registered under foreign capital. In particular, net inflows have been recorded under FDI all along; the net inflows of foreign securities investment exceeded USD 20 billion in the second and third quarters respectively in 2016, which was high in history; the outstanding external debt has turned around since the second quarter.
From these changes, we could infer that, first, China's economy and its markets remain widely attractive across the world; second, driven by actual demands, Chinese debtors are confident in adjusting external debt after relevant risks are released; third, relevant reforms provide a strong boost, such as the further liberalization of interbank bonds markets, macro-prudential management of full-scale cross-border financing, and the inclusion of the RMB in the SDR basket.
2017-01-19 10:35:19
· Wang Chunying:
Going forward, China's cross-border capital flows will contract towards an equilibrium. Undoubtedly, in a period to come, the global economy will remain subdued, featuring slowdowns in trading and investment, limited room for financial policy and weak economic recovery. Externally, the Fed's interest rate hikes and various uncertainties may interrupt the global financial markets now and then, which is the environment the countries including China will have to face all the time. This includes the impact of the policies of the new US administration. Overall, however, a country's economic condition is the ultimate determinant of its cross-border capital flows. China stands out in this regard. Its economic growth is at a high level across the world, its financial position is sound, its financial system is robust, the current account remains in surplus, and it takes the top spot worldwide by the size of foreign exchange reserves. Moreover, as I just mentioned, some positive factors that are conducive to the equilibrium between China's foreign exchange receipts and payments are emerging. Thank you.
2017-01-19 10:53:15
· Economic Daily:
The Fed hiked the US interest rate last December, and is expected to do it several times in 2017. What's your view on the impact of the interest rate hikes on China's cross-border capital flows? How would you respond? Thank you.
2017-01-19 11:06:54
· Wang Chunying:
Thank you for your questions. I would here like to share with you my observations and judgments with regard to the impact.
First, the impact from the two interest rate hikes respectively at the end of 2015 and 2016 on China's cross-border capital flows was on the decline. Alongside the two Fed interest rate hikes and the changes in the expectations before the hikes, the USD exchange rate was strengthened. The US Dollar Index climbed by 2.4% in the fourth quarter of 2015, and by 7.1% in the fourth quarter of 2016, which both increased the short-term pressure from cross-border capital outflows, but to a different extent. China's balance of foreign exchange reserves fell by USD 155.9 billion in the fourth quarter of 2016, which was 15% less year-on-year. In December in particular, the margin was 62% less year-on-year. In the fourth quarter, banks posted a deficit of USD 94.3 billion in foreign exchange settlements and sales, down by 43% year-on-year, and in December in particular, the margin was 48% less year-on-year. Banks registered a deficit of USD 51 billion in foreign-related receipts and payments for customers in the fourth quarter, contracting by 59% year-on-year, of which, the margin was 83% lower year-on-year in December. The reason for these is that many domestic players increased the foreign assets they held and serviced debt when the Fed raised the interest rate for the first time, but after the pressure was released, domestic players' adjustment of assets and debt had become more stable, and they continued to make outbound investments, but slowed its pace to service debt and strengthened demand for borrowing, thereby strengthening China's capability to dampen external impact on its cross-border capital flows.
2017-01-19 11:08:03
· Wang Chunying:
Second, the Fed interest rate hikes will have a spillover effect worldwide. When most relevant economies are under impact, the extent of impact on a country will be dependent on its economic fundamentals, complemented by the degree of liberalization, economic size, etc. Currently, China stands out worldwide for its economic conditions, robust financial markets and social stability, which will put China at an advantage in coping with the impact from the Fed interest rate hikes. We also have recently noticed that the major economic indicators of China have been improved to various degrees, indicating China's economic growth has become more stable. For example, as at last December, China's official manufacturing purchasing manager's index (PMI) had remained above the 50 boom and bust line for 5 years in a row, and the PPI had sustained positive growth for 4 consecutive years. The International Monetary Fund (IMF) has recently upped its projection of China's economic growth for 2017 to 6.5% by 0.3 percentage point from the level of the early projection.
2017-01-19 11:14:23
· Wang Chunying:
Third, further observations are required with regard to the Fed interest rate hike cycle and the strengthening of the US dollars. Based on the current market changes, the USD exchange rate will fluctuate somewhat, as shown by the recent fall of the US Dollar Index against the beginning of the year. There are doubts and disputes about the longer-term movement of US dollars in the market, considering the execution and effects of the policies of the new US administration as well as the impact of the uncertainties in the global financial markets. You may remember that after the hike by the Fed at the end of 2015, it was widely expected in the market that there would be 3-4 times of hikes in 2016, but the interest rate was hiked only once due to the many uncertain and unforeseeable factors.
No matter how the external environment changes, the most effective measure would be to do our own business well. In 2017, China's economy will continue to be operating within a reasonable range, and the deepened supply-side structural reform will guide the economy to become better in quality, more efficient, more equitable and more sustainable, which will help China's balance of payments find a basic equilibrium. Adhering to the general work guideline of making progress while maintaining stability, foreign exchange authorities will effectively enhance the level of trade and investment facilitation to serve the real economy. Meanwhile, the authenticity and compliance reviews will be strengthened to sustain a tough stance on foreign exchange irregularities and guard against risks associated with cross-border capital flows.
2017-01-19 11:19:26
· ITAR-TASS:
What would you say about the China-Russia cooperation in foreign exchange last year? What is expected from China-Russia cooperation in foreign exchange this year? Thank you.
2017-01-19 11:23:32
· Wang Chunying:
Thank you for your questions. With regard to China-Russia cooperation in finance, the SAFE is committed to cooperating with the initiator to boost closer cooperation between the two countries' commercial banks, and provide better services for bilateral trade and economic transactions, which have gone smoothly. We will continue to promote these efforts in 2017.
2017-01-19 11:24:41
· China News Service:
At the beginning of this year, the SAFE imposed more stringent declaration requirements for individual purchases of foreign exchange. How will this impact individual purchases of foreign exchange, given the current situation? Thank you.
2017-01-19 11:35:38
· Wang Chunying:
Thank you for your question. The data we have monitored show that individual purchases of foreign exchange has stayed stable across the country since the policy is implemented. Since January, the average individual purchases of foreign exchange have declined on a year-on-year and month-on-month basis. This indicates that people have developed an accurate understanding of the policy, with their sentiment staying stable. This is, I believe, attributable to the fact that two aspects of the policy for individual purchases of foreign exchange have remained unchanged.
First, the quota for individuals' annual purchases of foreign exchange remains unchanged. After declaring the demand for authentic purchases of foreign exchange by presenting their valid ID cards, domestic residents can purchase foreign exchange within the annual quota from the bank counters and through electronic channels. The annual quota is still USD 50,000, which can satisfy the demands of most people for foreign exchange under the current account. To purchase foreign exchange under the current account beyond the quota, the authentic evidencing materials with the amount of transaction indicated should be presented to the bank, with no barriers in the process.
2017-01-19 11:36:09
· Wang Chunying:
Second, the policies for the use of foreign exchange for study and travel abroad that are closely related to people's daily life remain unchanged. To purchase foreign exchange within the quota for study aboard, complete and authentic information should be declared as required. Where the purchases are beyond the quota, private passport, valid visa, and letter of admission from an overseas school, certificate of tuition or cost of living certificate should be presented to buy foreign exchange from banks. Foreign exchange for travel abroad could be bought within the quota based on the traveler's demand or bank card could be used aboard to use the foreign exchange as normal. Moreover, the foreign exchange purchasing policies remain unchanged for residents' other demands for foreign exchange under the current account, such as visiting relatives, seeking medical help abroad, trade in goods, purchases of non-investment insurances and various consulting services.
2017-01-19 11:41:37
· Wang Chunying:
The purposes for improving the declaration management of personal foreign exchange information are to enhance ex-post verification, strengthen management and disposal of irregularities and better ensure authentic requirements for foreign exchange. In the past, due to shortfalls in the management of individual purchases of foreign exchange, there were irregularities, frauds and money laundering, which had disturbed normal transaction order, and eroded the interests of residents who followed the provisions on individual purchases of foreign exchange. As a result, it is imperative to improve the management of the declaration of personal foreign exchange information, especially break down what to be declared, make known the rules individuals should observe to buy and make payment in foreign exchange and relevant legal responsibilities they should take on, and intensify banks' responsibilities for authenticity and compliance reviews.
It is now easy for individuals to buy and make payment in foreign exchange under the current account, and the SAFE will continue to optimize relevant policies, and urge banks to improve the level of services while intensifying authenticity and compliance inspection of banks that handle individual purchases of and payments in foreign exchange. Meanwhile, further efforts will be made in the ex-post sample surveys and inspections of individual purchases of and payments in foreign exchange, and in the monitoring, analysis, selection and inspection frequencies of individuals' information declaration and transaction data. Heavier penalties will be imposed on individuals and banks involved in false declaration, obtaining foreign exchange under false pretenses, frauds, money laundering, illegal use and transfer of foreign exchange to enhance the costs for violating regulations and laws. Relevant measures are as follows: including individuals violating regulations in the watchlist, restricting them from purchasing foreign exchange within the quota or prohibiting them from buying foreign exchange, and incorporating their behaviors into their personal credit records; the anti-money laundering authority will conduct anti-money laundering investigations into anyone suspected of money laundering; anyone suspected of committing a crime will be transferred to the judicial department for the department to take legal actions against them.
2017-01-19 11:59:33
· Union Morning Paper:
Experts have recently said that USD 2 trillion in foreign exchange reserves would be sufficient. What would you say about the size of foreign exchange reserves and its changes? Thank you.
2017-01-19 12:09:14
· Wang Chunying:
Thank you for your question. The size of foreign exchange reserves has drawn wide concerns. I would here like to share with you some of my ideas.
First, it is not necessary to hype a certain figure since it is normal for financial indicators to go through ups and downs.
Second, China's foreign exchange reserves are still sufficient in terms of its capabilities to make external payments and service external debt. There is no common measurement for the size of a country's foreign exchange reserves. By traditional standards, foreign exchange reserves must be sufficient to make payments for at least 3 months of imports. Assuming no RMB is used for making external payment, the current demand for foreign exchange is about USD 400 billion. But as a matter of fact, RMB can be used for making cross-border payments now. Turning to servicing of external debt, foreign exchange reserves should be sufficient to pay off short-term external debt. Currently, the short-term debt denominated in RMB and foreign currencies amounts to USD 800-900 billion, much less than USD 1.3 trillion as at the 2014 yearend, which indicates that most external debt servicing pressure has recently been released. To sum up, China's capabilities to make external payments and service external debt remain strong as shown in the size of China's foreign exchange reserves and are in a good position to safeguard China's economic and financial security.
2017-01-19 12:15:31
· Wang Chunying:
Third, from the perspective of foreign exchange reserves' sufficiency for domestic players to hold more external assets, the changes in China's foreign exchange are in nature the changes in the structure of external asset holders, which is a matter of process with some positive implications. As Chinese enterprises' and individuals' economic strengths have been enhanced in recent years, the demands for diversifying asset allocation in the private sector are set to rise, which is a process of encouraging companies and individuals to hold more foreign exchange. According to the International Investment Position, as at September 2016, the external assets held by China's private sector accounted for 49.7% of its total external assets, up by 4.5 percentage points from the end of 2015. In the past, the share of reserves in external assets was large, but now the share of private sector rises, making external assets and external debt of the private sector more balanced and matched with each other. As at the end of September, the private sector's net external debt was USD 1.5 trillion, much lower than the peak of USD 2.3 trillion at the end of 2014. Moreover, the increase in the external assets held by the private sector is not necessarily from foreign exchange reserves. The continued surplus under the current account, and the policies on cross-border financing and market liberalization also facilitate the cross-border capital inflows, which could also be the sources of capital for domestic players to hold more external assets. It is certain that external assets should be adjusted properly and moderately between the government and the private sector, which should be aligned with the levels of economic development and opening up in China. In the future, China will enhance the elasticity of the RMB exchange rate while ensuring the rate stays stable at a reasonable and even level, and improve the cross-border capital flow management system under the framework of macro-prudential management, which will be favorable for stable adjustment as mentioned earlier.
2017-01-19 12:33:21
· Wang Chunying:
Fourth, China's foreign exchange reserves will continue to fluctuate within a reasonable range. There are four factors that impact the changes in the size of foreign exchange reserves: first, the central bank's operation in the foreign exchange markets; second, the price fluctuations of foreign exchange reserves as investment assets; third, other currencies' exchange rates against the USD may impact the changes in the size of foreign exchange reserves since the USD is the measurement currency of foreign exchange reserves; fourth, as defined by the IMF, foreign exchange reserves used to support going global will be excluded from the entry of foreign exchange reserves in accounting, and vice versa. In the future, China's foreign exchange reserves will be sufficient to meet the conditions for fluctuating within a reasonable range. On the one hand, the recent increase in the foreign assets held by the private sector is correlated with the current market environment, especially the strengthening of the US dollars, but the dollar's movement is uncertain and impossible to rise all along, while the RMB exchange rate will obtain more support from the domestic economic fundamentals, which means that the private sector may adjust the structure of assets and liabilities denominated in domestic and foreign currencies, making foreign exchange receipts transfer towards official reserves again. On the other hand, and the most important, China's economy will continue to grow at a medium-to-high speed, and the balance of payments will stay stable with a surplus under the current account and a deficit under the capital and financial account. Thank you.
2017-01-19 12:40:37
· The Voice of China:
Hello, Ms. Spokesperson. As for a key word you mentioned in your previous answer, outstanding external debt, I learned that it has picked up for two quarters. What would you say about this? As far as you know, will this continue in the future? Thank you.
2017-01-19 12:46:37
· Wang Chunying
Thank you for your questions. Indeed, China's outstanding external debt has rebounded for two consecutive quarters. As at the end of June 2016, the full-scale outstanding external debt amounted to USD 1.39 trillion, up by 2% quarter-on-quarter; and as at the end of September, the figure was USD 1.43 trillion, up by 3% quarter-on-quarter. The pick-up of the outstanding external debt for two quarters in a row reversed the downward trend since the second quarter of 2015, for two reasons as follows:
First, in the face of optimistic conditions for imports and exports, Chinese enterprises had developed a stronger demand for external financing. According to the external debt structure, the share of credit financing related to the real economy especially trade was high, indicating the country was highly susceptible to the fluctuations in imports and exports. Since the second half of 2014, as the imports declined and the US dollars kept strengthening, Chinese enterprises had actively adjusted the level of external debt they incurred and repaid short-term trade finance and trade credit. Since the second quarter of last year, however, Chinese imports had bottomed out, and grown gradually on a quarter-on-quarter basis especially since May. Meanwhile, the US Dollar Index had fallen, and enterprises' demand for trade finance had rebounded. As at the end of September 2016, the outstanding loans and trade credit rose by USD 35.3 billion quarter-on-quarter and by USD 42.5 billion against the end of March. On the one hand, the growth of enterprises' external debt in two consecutive quarters was for the purpose of the enterprises' business operation and development, and on the other hand, this indicates the sound capability of Chinese enterprises to finance externally and use domestic and foreign funds to serve their production and operations. This also shows that with promising prospects of their operations, Chinese enterprises were optimistic about their outlooks and willing to support their imports and exports through financing.
2017-01-19 12:48:06
· Wang Chunying:
Second, foreign investors were optimistic about returns on investing in China and more willing to make investments. In 2016, China's economy maintained stable growth, at a medium-to-high speed, and witnessed a continued surplus under trade in goods, but since April, as the expectations of the Fed interest rate hikes in the global financial markets were weakened, the economy of the euro area and Japan recovered slowly, and the environment in the global financial markets changed, foreign investors were still confident in the returns on investing in China, with a stronger demand for holding more RMB assets. In addition, as China's policy for external financing was further liberalized, China attracted USD 20.8 billion in non-resident deposits and debt securities in the second and third quarters, which was a result of foreign investors' active participation, and reversed the downward trend of the first quarter.
It is expected that China's external debt will continue to turn for the better in 2017. Since the beginning of last year, China has introduced a series of reformative measures in favor of domestic players' cross-border financing and foreign players' making investments in China. These measures include steadily pushing forward macro-prudential management of full-scale cross-border financing, facilitating foreign exchange settlement of external debt by Chinese enterprises, vigorously pressing ahead with the liberalization of the interbank bonds markets, and further deepening the external debt management reform to facilitate foreign exchange settlements under the capital account. In 2017, these policies will continue to be deepened, and relevant market infrastructure will be refined, which, coupled with the support from China's real economy and foreign trade development, will be favorable for boosting the steady bounces of China's outstanding external debt.
2017-01-19 12:50:50
· CBN:
We have noticed that banks' sales and settlements of foreign exchange remained in deficit, which indicates there are expectations of depreciation of the RMB exchange rate. The US Dollar Index has been weakened and there have been a wave of rebounding of the RMB exchange rate against the USD recently. Are you worried that this will unleash the demand of enterprises and individuals for purchasing foreign exchange to further drive RMB depreciation? What responses does the SAFE have? Word has it that settlement of foreign exchange will be mandated when necessary. Is this true?
2017-01-19 12:57:41
· Wang Chunying:
Thank you for your questions. But you'd better judge hypothetical problems prudentially. As far as specific policies are concerned, it is advised that you refer to the official documents released by relevant government departments, rather than give the rumor much credibility.
As for the changes in the RMB exchange rate, we believe it should be looked at in the short term and the medium and long term respectively. Over the short run, the supply and demand in foreign exchange markets are impacted by different factors such as balance of payments, market sentiment, cross-border capital flows and speculation and hype, which are reflected in the exchange rate. Sometimes due to expectations and speculation, the supply and demand may deviate from the fundamentals. In the medium and long run, the exchange rate is subject to the impact of the fundamentals. It was much talked and is widely believed that there is no ground for RMB exchange rate depreciation according to China's economic fundamentals. It is sure that this does not exclude short-term fluctuations of the RMB exchange rate, which is normal. Market participants should make analysis by objective standards.
As for the rumor you mentioned, I have not heard it yet. In fact, to guard against risks, a response plan should be in place in relation to the pressure from cross-border capital inflows or outflows, and prudential assessment and implementation should be ensured based on domestic and foreign conditions. Our rationale is still that by adhering to the general work guideline of making progress while maintaining stability, trade and investment facilitation should be stuck to serve the real economy, while the authenticity and compliance reviews should be promoted to crack down on foreign exchange irregularities more rigorously.
2017-01-19 13:23:13
· Xi Yanchun, the moderator:
Thank you, Ms. Director. This is the end of today's press conference. Thank you all.
2017-01-19 13:27:05
(The original text is available at www.china.com.cn)
