The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' foreign exchange sales and settlement and banks' foreign-related receipts and payments for customers for October 2017, and its press spokesperson answered media questions on recent cross-border capital flows.
Q: China's cross-border capital flows remained balanced in the first three quarters of this year. Could you brief us on the situation in October?
A: China's cross-border capital flows continued to be in balance in October. First, banks' foreign exchange sales and settlement remained in surplus. In October 2017, a surplus of USD 2.8 billion was registered in banks' foreign exchange sales and settlement, compared with a surplus of USD 300 million in September, indicating the domestic demand and supply of foreign exchange has sustained an equilibrium. Second, the non-banking sectors posted a further balance in foreign-related receipts and payments. In October, the non-banking sectors including enterprises and individuals recorded a surplus of USD 100 million in foreign-related receipts and payments, compared with a deficit of USD 1.7 billion in September. Third, the balance of China's foreign exchange reserves continued to recover. As at the end of October, China posted USD 3.1092 trillion in the balance of foreign exchange reserves, an increase of USD 98.7 billion from the end of 2016, and USD 700 million from the end of last month, marking the 9th consecutive month of growth.
Currently market participants' foreign-related receipts and payments are more stabilized and orderly, providing a boost to the adaptive equilibrium between the demand and supply of foreign exchange. First, market participants are more sensible in selling and settling foreign exchange. In October, the desire to settle foreign exchange remained stable, with bank customers' foreign exchange settlement as a percentage of their income from foreign-related foreign exchange being 62.9%, slightly increasing by 0.1 percentage point from the first three quarters. Bank customers' desire to purchase foreign exchange declined further, with the ratio of foreign exchange purchases by bank customers to foreign-related foreign exchange payments reaching 61.6%, down by 4.5 percentage points from the first three quarters. Second, foreign exchange inflows through major channels such as trade in goods, use of foreign funds and cross-border financing continued to grow. In October, the surplus in banks' foreign exchange sales and settlement under trade in goods for customers rose by 42% year on year, foreign exchange settlement under FDI recorded both year-on-year and month-on-month increases, and cross-border financing continued stable recovery. Third, individuals' purchases of foreign exchange were more stable. In October, individuals' purchases of foreign exchange fell from the seasonal peak of the third quarter and also were much lower than the same period of the previous year.
China's economy has recently sustained a stronger and more stable momentum for growth, fundamentally supporting more stable and balanced cross-border capital flows in China. The 19th CPC National Congress made a comprehensive plan for the realization of the two centenary goals, and proposed to build a modern economic system, continue to transform the way of development, optimize the economic structure and change the dynamics of growth, so as to boost the sustainable and healthy development of the economy, which will be the foundation to promote the equilibrium of China's balance of payments and ensure stable flows of cross-border capital in the medium and long term.
