The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' foreign exchange sales and settlements and banks' foreign-related payments and receipts for customers for November 2017, and its press spokesperson answered media questions on recent cross-border capital flows.

Q: Could you brief us on China's cross-border capital flows for November?

A: China's foreign exchange market continued to see equilibrium between supply and demand in November. According to the foreign exchange reserves data released on December 7, the balance of foreign exchange reserves as at the end of November amounted to USD 3.1193 trillion, up by USD 10.1 billion month on month, recovering for 10 consecutive months, primarily due to the basic equilibrium between domestic demand and supply of foreign exchange. As for the composition of the demand and supply of foreign exchange, a deficit of USD 7.5 billion was recorded in foreign exchange sales and settlements in November. On the other hand, to mitigate risks and preserve value, enterprises' net sales of foreign exchange in RMB-foreign exchange derivatives markets including forwards and options rose in the month, leading to a decrease of USD 4.1 billion in foreign exchange position of banks for the month, hence increasing the supply of foreign exchange. With other factors taken into consideration, the supply and demand of foreign exchange in China found a basic equilibrium in the month. In addition, foreign-related receipts and payments of non-banking sectors such as companies and individuals registered a deficit of USD 12.9 billion for the month, of which, the receipts and payments of foreign exchange were relatively balanced with a small deficit of USD 1.4 billion.

Cross-border capital flows through major channels were stable and reasonable. First, the willingness of market participants to settle foreign exchange was strengthened while their desire to purchase foreign exchange was weakened. In November, the ratio of foreign exchange settlement by bank customers to foreign-related foreign exchange receipts reached 61.0%, up by 5.4 percentage points year on year; the ratio of foreign exchange purchases by bank customers to foreign-related foreign exchange payments was 62.7%, down by 9.5 percentage points year on year. Second, foreign exchange sales and settlement under trade in goods remained in surplus and capital inflows and foreign exchange settlement under FDI climbed. In November, foreign exchange sales and settlements under trade in goods of banks for customers recorded a surplus of USD 15.7 billion, up by 29% year on year; foreign exchange capital settlement under FDI almost doubled on a year-on-year basis. Third, foreign exchange purchased by individuals continued to fall stably. In November, foreign exchange purchased by individuals plummeted by 44% year on year and was 15% lower than the monthly average of January-October 2017, indicating a low level in recent years.

China's economy continued to perform stably with good momentum for growth, providing a fundamental guarantee for stable cross-border capital flows. In November, foreign demand continued to be strengthened and domestic demand remained robust, driving USD-denominated exports to rise by 12% year on year, a sub-high since the beginning of this year; and China's imports grew by 18%; official PMI was 51.8, up by 0.2 percentage point month on month, falling within the expansion range for 16 straight months. Following the general work guideline of making progress while maintaining stability and the new concept for development, China will focus on the supply-side structural reform going forward, pressing ahead with the efforts of stabilizing growth, promoting reform, adjusting structure, benefiting the public and guarding against risks, with the aim of boosting the sustainable and healthy development of the economy and society and laying a solid foundation for the basic equilibrium of China's balance of payments in the medium and long term.