The State Administration of Foreign Exchange (SAFE) has recently released the data on banks' foreign exchange sales and settlement and their foreign exchange receipts and payments for customers for April 2017, and its spokesperson answered press questions on recent cross-border capital flows.
Q: Since the beginning of this year, remarkable progress has been achieved in China's cross-border capital flows. Could you brief us on relevant performance for April?
A: China's cross-border capital flows continued the good momentum for stable growth in April, with the highlights as follows: first, foreign exchange supply and demand found a better equilibrium. In the month, banks' foreign exchange settlement grew by 5% year on year while their foreign exchange sales fell by 2%, leading to a deficit of USD 14.9 billion, down by 37% year on year. The amount of contracts signed for forward settlement of foreign exchange went up by 81% year on year, while the amount of contracts signed for forward sales of foreign exchange dropped by 24%, leading to a surplus of USD 5.1 billion, compared with a deficit of USD 1.3 billion the same period last year. Due to the foreign exchange supply and demand factors such as spot and forward foreign exchange sales and settlement and stock options, the domestic supply and demand of foreign exchange continued the basic equilibrium in April, and generally outperformed those of March. Second, the non-banking sector registered a low deficit in foreign-related receipts and payments on a month-on-month basis. The deficit for April was USD 15.3 billion, down by 12% month on month. Specifically, the receipts and payments in RMB terms recorded a deficit of USD 10 billion, down by 11%; the receipts and payments in foreign exchange registered a deficit of USD 5.4 billion, down by 13%. In addition, the balance of China's foreign exchange reserves had grown for three consecutive months, as reflected in the balance of foreign exchange reserves as at the end of April that was released on May 7, and achieved a month-on-month increase of USD 20.4 billion in April.
Domestic market participants registered stable foreign-related receipts and payments. First, market participants' foreign exchange settlement rate rose slightly and their foreign exchange purchase rate stayed stable. In April, the foreign exchange settlement via banks for customers as a percentage of the foreign-related foreign exchange receipts hit 63%, up by one percentage point against the first quarter; the share of foreign exchange purchases by customers in the foreign-related foreign exchange payments was 68%, consistent with that of the first quarter. Second, cross-border financing by enterprises continued to rise. As at the end of April, the balance of cross-border financing denominated in foreign currencies for imports such as refinancing and forward L/C rose by USD 2 billion month on month, representing growth for 14 consecutive months. Third, enterprises became more sensible in making ODI. Since the beginning of 2017, China's ODI has been further stabilized, with a higher proportion going to manufacturing, information transmission, software and IT services. Fourth, residents' purchases of foreign exchange dropped further. In April the figure went down either on a year-on-year or on a month-on-month basis and is now at its lowest level for one and a half years.
Overall, China's economy has grown stably with a good momentum for development since the beginning of this year, and the growth pace has been further stabilized, indicating strong potential for future development. At the same time, the further opening up of the financial market has continued to produce positive results, solidifying the foundation for stable cross-border capital flows and balanced development.
