Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data on foreign exchange reserves. Could you explain the causes of changes in foreign exchange reserves for January 2020? What would you say about the future trends?

A: China posted USD 3.1155 trillion in foreign exchange reserves as at the end of January 2020, up by USD 7.6 billion or 0.2% month-on-month.

China's cross-border capital flows stayed stable and the supply and demand of the foreign exchange market maintained basic equilibrium in January 2020, providing a strong support for the stable size of foreign exchange reserves. But due to multiple factors including the phase-one deal signed by the US and China, Britain's official exit from the EU and the NCP epidemic, the US Dollar Index rose slightly on international financial market and bond prices hiked in major countries. Under the combined impact of exchange rate conversion and asset price changes, China's foreign exchange reserves increased.

Looking ahead, external environment is expected to remain complex and challenging, and there will still be many uncertainties in the global financial market. Despite the impact of the NCP epidemic on China's economy, which will be short-lived, China is confident, capable and convinced to win this battle. Moreover, China's fundamentals for long-term, sound and high-quality economic growth will remain unchanged, and the operation mechanism of the foreign exchange market will improve, which will be favorable for stabilizing market operations. All this will lay a solid foundation for China's foreign exchange reserves to remain stable at large.