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  • Index number:
    000014453-2022-0013
  • Dispatch date:
    2022-01-21
  • Publish organization:
    State Administration of Foreign Exchange
  • Exchange Reference number:
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    Foreign Exchange Receipts and Payments Data for 2021 -- Press Conference Transcript
Foreign Exchange Receipts and Payments Data for 2021 -- Press Conference Transcript

The State Council Information Office (SCIO) held a press conference on Friday, January 21, 2022 at 10 a.m. Ms. Wang Chunying, deputy administrator and press spokesperson of the State Administration of Foreign Exchange (SAFE), was invited to unveil the data on foreign exchange receipts and payments for 2021 and answer media questions.

Shou Xiaoli, deputy head of the Press Bureau and press spokesperson of the SCIO:

Ladies and gentlemen, good morning. Welcome to the press conference of the SCIO. Today, we will continue with the regular economic data release. We are pleased to have with us Ms. Wang Chunying, deputy administrator and press spokesperson of the SAFE. She will unveil the data on foreign exchange receipts and payments for the year of 2021 and answer your questions.
Now I will give the floor to Ms. Wang Chunying.

2022-01-21 10:00:28

Wang Chunying, deputy administrator and press spokesperson of the SAFE:

Good morning, everyone. Welcome to today’s press conference. First, I would like to disseminate China’s foreign exchange receipts and payments data for 2021 and then I will take your questions.

Since the 18th National Congress of the Communist Party of China (CPC), China has been confronted with the complex and severe international economic and financial situation. However, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at the core, China has adhered to the general principle of seeking progress while maintaining stability, coordinated development and security, and created a new situation in reform and opening-up. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the SAFE resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council. We deepened the reform and opening-up in the field of foreign exchange, promoted facilitation of cross-border trade and investment, and calmly responded to external shocks. By doing so, we maintained the stability of the foreign exchange market. Besides, we also promoted the basic balance of international payments, maintained the overall stability of foreign exchange reserves, in order to actively help China secure a decisive victory in building a moderately prosperous society in all respects.  

In 2021, under coordinated epidemic prevention and control as well as economic and social development, China’s national economy was generally stable, with major macro indicators within a reasonable range. Against this background, China’s foreign exchange market was generally stable. The renminbi exchange rate remained basically stable at a reasonable and balanced level, the cross-border capital flow ran at a reasonable and orderly manner, and the foreign exchange reserves maintained an overall stable scale.

According to the data on foreign exchange settlement and sales by banks in 2021, in dollar terms, banks settled US$2.5616 trillion and sold US$2.2940 trillion of foreign exchange, representing a surplus of US$267.6 billion. In renminbi terms, banks settled 16.5 trillion yuan and sold 14.8 trillion yuan of foreign exchange, representing a surplus of 1.7236 trillion yuan. For cross-border receipts and payments by non-banking sectors, in dollar terms, banks registered US$6.0399 trillion in foreign-related receipts and US$5.6835 trillion in foreign-related payments for customers, representing a surplus of US$356.4 billion; or in renminbi terms, banks handled foreign-related receipts of 39.0 trillion yuan and payments of 36.7 trillion yuan for customers, recording a surplus of 2.2965 trillion yuan.

China’s foreign exchange receipts and payments for the year of 2021 present the following characteristics:

2022-01-21 10:04:24

Wang Chunying:

First, foreign-related transactions remained active and cross-border capital flows were in an orderly manner. In 2021, foreign exchange settlement and sales by banks totaled US$4.9 trillion, and the scale of cross-border receipts and payments by non-banking sectors reached US$11.7 trillion, with an increase of 24% and 35% respectively over 2020. It was mainly because China led the world in epidemic prevention and control and economic recovery, and trade in goods and all sorts of investment and financing activities remained relatively active.

Second, the sales ratio remained basically stable, and the willingness of cross-border financing became stabilized. In 2021, the foreign exchange sales rate, a measure of customers’ willingness to buy foreign exchange, the formula we use is the ratio of foreign exchange purchased by customers from banks to foreign-related foreign exchange payments made by customers, stood at 63.6%, basically the same as that in 2020. From the perspective of customers’ willingness for foreign exchange financing, the overall trend has become stabilized. As of the end of 2021, outstanding foreign exchange loans in China registered US$355.4 billion, an increase of 8.4% from the end of 2020. It remained generally stable since the second half of the year. The balance of foreign currency financing under international trade such as import refinancing and forward letter of credit increased by US$11.6 billion from the end of 2020 to US$132.2 billion, roughly equivalent to 2019 before the pandemic. From the perspective of customers, foreign exchange sales were basically stable, and the willingness of cross-border financing tended to stabilize.  

Third, the foreign exchange settlement rate rose steadily, and the balance of domestic foreign exchange deposits grew rapidly. In 2021, the foreign exchange settlement rate, a measure of customers’ willingness to settle foreign exchange, or the ratio of foreign exchange sold by customers to banks to customers’ foreign-related foreign exchange receipts, reached 66.4%, up by 1.4% year on year. As of the end of 2021, the balance of domestic foreign exchange deposits of market participants including enterprises went up US$95.4 billion from the end of 2020 to US$695.9 billion. It reflected the enterprises’ reasonable arrangement of foreign exchange funds, part of which was settled and part of which was held in the form of deposits.

2022-01-21 10:07:44

Wang Chunying:

Fourth, the foreign exchange hedging ratio has grown steadily, and risk neutrality among enterprises has enhanced. In 2021, the scale of enterprises using foreign exchange derivatives such as forwards and options to manage exchange rate risks increased by 59% year on year, 36% higher than the growth rate of foreign exchange settlement and sales by banks in the same period. It drove the corporate hedging ratio to increase by 4.6% year on year to 21.7%, indicating that the awareness of risk aversion and operation philosophy of risk neutrality among enterprises have improved.

Fifth, foreign exchange reserves remained basically stable. As of the end of 2021, China’s foreign exchange reserve balance stood at US$3.2502 trillion, a slight increase of 1.0% from the end of 2020. In 2021, changes in the volume of foreign exchange reserves were mainly attributed to valuation factors including foreign exchange rate conversion, asset price changes, and reserve investment returns.

In 2022, the external environment will remain complex and volatile, with unstable and uncertain factors in the global epidemic and the world economic situation. Holding on to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the SAFE will fully implement the spirit of the 19th CPC National Congress, each plenary session of the 19th CPC Central Committee, and the Central Economic Work Conference. The SAFE will earnestly carry out the decisions and arrangements of the Party Central Committee and the State Council, by prioritizing stability, seeking progress while keeping performance stable. The SAFE will fully apply the new development philosophy, integrate it into the new development paradigm, and deepen reform and opening-up in the foreign exchange sector for the stability of the macro-economy. The SAFE will also strive to maintain a healthy order in the foreign exchange market by further ensuring “stability on the six fronts” and “security in the six areas”, so as to promote the high-quality economic development, and welcome the successful convening of the 20th National Congress of the CPC with outstanding achievements.

Now, I would like to take your questions on China's foreign exchange receipts and payments.

2022-01-21 10:10:21

Shou Xiaoli:
Thank you, Ms. Deputy Administrator Wang Chunying. Now we will move on to take your questions. Please state your outlet before asking the questions.

2022-01-21 10:11:20

China Media Group CCTV:

What would you say about the performance of China’s foreign exchange market in 2021? What were the characteristics? What are your perspectives on China’s foreign exchange receipts and payments in 2022? Thank you.

2022-01-21 10:37:23

Wang Chunying:

Thank you for your question. In 2021, the COVID-19 pandemic continued to disrupt the global economic recovery. The monetary policies of major developed economies began to shift, resulting in many uncertainties and instability. Under the complex and volatile environment, China’s foreign exchange market was generally stable. The renminbi exchange rate remained stable, cross-border capital flows were in a reasonably and orderly manner, and the balance of payments was basically balanced. China’s foreign exchange market mainly presented the following characteristics:

First, the exchange rate of renminbi against the U.S. dollar showed two-way fluctuations and is expected to be relatively stable. The spot exchange rate of the renminbi against the U.S. dollar rose slightly by 2.6% in the whole of last year, making it more robust than the currencies of major developed and emerging economies. The renminbi exchange rate rose and fell and maintained two-way fluctuations in different stages. In the first five months, the renminbi exchange rate generally appreciated by 2.8%, depreciated by 1.6% in June. It fluctuated within a narrow range from July to September, and appreciated by 1.4% since October. The renminbi exchange rate eventually closed at 6.37 at the end of 2021. Throughout the year, the renminbi against the U.S. dollar rose to 6.35 at the highest point, while fell to 6.57 at the lowest point. The range of fluctuation was 22 basis points. The two-way fluctuations of exchange rate were affected by various factors, including mainly the international financial environment as well as the supply and demand of the domestic foreign exchange market. We also noticed that professional indicators, such as foreign exchange forwards and options, have showed signs of reasonable divergence and relative stability in the market expectations for exchange rates.

Second, real economic activities such as trade and investment promoted cross-border capital inflows. China’s import and export of goods continued to maintain a relatively high surplus, up by 30% year on year in U.S. dollar terms. It demonstrated the advantages of China’s industrial and supply chains in the face of the pandemic. As a result, in 2021, the surplus of foreign-related receipts and payments of trade in goods by enterprises and other sectors reached US$339.5 billion, equivalent to 95% of the surplus of the entire cross-border foreign exchange receipts and payments. Meanwhile, according to the data from the Ministry of Commerce, the actual use of foreign investment in China in 2021 stood at US$173.5 billion, a year-on-year increase of 20%, which reached a historical high. It reflected China’s good economic development prospects have strong attraction for overseas long-term capital. In addition, in 2021, foreign investors increased their holdings of domestic bonds by US$166.6 billion, and renminbi assets have become an important choice for foreign capital allocation. Real economic activities such as trade and investment have become the main driving force for cross-border capital inflows.

Third, the external assets of China’s private sector increased significantly. According to the balance of international payments (BOP), China’s outbound investment, especially that of the private sector, increased correspondingly under the background of current account surplus and overall inflow of overseas capital. In the first three quarters of 2021, the net increase of outward investment by the private sector increased by US$489 billion, including US$85.4 billion of foreign direct investment. Overseas securities investment by domestic residents through the Hong Kong Stock Connect and QDII channels reached nearly US$100 billion. Investments other than direct and portfolio investments exceeded US$310 billion, indicating that domestic entities were relatively abundant in foreign exchange and had increased their deposits and loans overseas. In general, China’s private sector including enterprises and financial institutions had cross-border capital flows in and out, forming a pattern of independent balance of international payments. These were the three major features of cross-border receipts and payments and foreign exchange markets throughout 2021.

Looking ahead to 2022, both the internal and external environment will affect the situation of China’s foreign exchange receipts and payments in 2022. Externally, if the global economy and finance gradually return to normal, China’s cross-border capital flow will become more stable. Uncertain factors such as the pandemic may continue to exist in the future, but the gradual recovery of the global economy from the pandemic will still be a general trend. With the gradual withdrawal of fiscal and monetary stimulus, the international trade and investment will return to normal, which is conducive to China’s cross-border capital movements in a more stable and sustainable direction. Internally, China remains unchanged in its fundamentals for a long-term sound growth, which will support the overall stability of the foreign exchange market. China will continue to coordinate epidemic prevention and control with economic and social development, while all sectors in the country will make concrete efforts to keep the economy operating within a reasonable range and make steady progress in the two-way opening of the financial market. These efforts will create a favorable policy environment for the stable and balanced flow of cross-border capital. As an automatic stabilizer, the renminbi exchange rate will also help in stabilizing the macro economy and regulating the balance of payments. Therefore, from the analysis of the above two aspects, China’s foreign exchange market is expected to show an overall stability and a more balanced development trend in 2022. Thank you.

2022-01-21 10:37:35

Phoenix Satellite TV:

With the spread of the COVID-19 pandemic, China’s trade surplus in goods has significantly increased since 2020, which also in turn led to a significant increase in China’s current account surplus. What’s your take on that? What are your views on future current account trends? Thank you.

2022-01-21 10:41:20

Wang Chunying:

Thanks for your question. Your observations are important. To analyze the balance of payments, the current account is an important observational perspective.

First, let us review the changes in China’s current account since the outbreak of the COVID-19 pandemic. Usually, we summarize what has changed in the past. In 2020, China’s current account surplus accounted for 1.9% of GDP, compared with 1.5% in the first three quarters of last year. According to preliminary estimates, the ratio of the current account surplus to GDP for the whole of last year was within 2%, falling within a reasonable and balanced range recognized by the international community. Therefore, we can see that China’s current account was relatively stable and maintained a reasonable size of surplus. It showed two results. First, it reflected the outcomes of pandemic prevention and control as well as economic and social development. Second, it highlights the achievements China has made in promoting the transformation, upgrading and high-quality development of cross-border trade in recent years, which has an obvious effect on trade in goods.

Specifically, the rise in trade surplus in goods not only reflects the strength of China’s industrial and supply chains in the face of the pandemic, but also makes us all feel gratified that the underlying factors to improve the quality and efficiency of foreign trade have played an important role. The increasing diversification of China’s trading partners has not only broadened our international markets, but also contributed to the recovery of more regional trade. Europe and the United States are still our important trading partners and traditional markets for China. The average trade volume with them in the past two years increased by 19% and 24% respectively compared with 2019, which was better than 2019 before the pandemic. At the same time, the expansion of our trade to other markets has also shown results. For example, the scale of foreign trade to ASEAN and Latin America has increased by 22% and 21% respectively. Against the backdrop of the pandemic, our trading partners have become increasingly diversified.

The structure of China’s export commodities continued to be optimized. In 2021, the export of traditional advantageous items like mechanical and electrical products increased by 29% year on year, with growth rate 23% higher than that in 2020. The growth rate of high-tech exports also increased by 20%. Cross-border e-commerce and other new forms of trade have become new drivers of trade development. According to the SAFE, the average revenue and expenditure of online shopping from 2020 to 2021 increased by 79% compared with 2019.

The vitality of our foreign trade business entities has been enhanced. According to the SAFE, the number of enterprises receiving and paying for goods trade in 2021 was more than 500,000, an increase of more than 8,000 over 2019. From the perspective of goods trade, it reflected the advantages of China’s supply chain and industrial chain, the improvement of quality and efficiency of foreign trade and other deep-seated factors were also a driving force. This is analyzed from the perspective of trade in goods.

From the perspective of trade in services, the impact of the pandemic was still relatively obvious, but the deficit remained low. China’s service trade used to have a relatively large deficit, but now the deficit narrows low. At the same time, we have observed a change here that the development of trade in productive services related to manufacturing has accelerated. The average deficit in service trade in the past two years has been about US$120 billion, down by 53% from 2019. It was mainly because the spread of the pandemic has affected cross-border activities such as studying abroad, so the spending has dropped by 53% accordingly. In addition, with the change of information technology and the continuous transformation and upgrading of industries, the trade in productive services, closely relating to the manufacturing industry, continued to develop. The related import and export showed a small surplus in 2021, but with a deficit in 2019 and 2020. Trade in productive services includes traditional processing, transportation and construction services, as well as emerging productive services such as finance, insurance, telecommunications, computers and information. These productive services showed a small surplus in 2021, which was a new change.

Looking at the future trend of current account, we judge that it is likely to gradually return to normal and remain within a reasonable and balanced range. In this regard, I would like to say a few words about the impact on the current account. We believe that the impact of the pandemic on international economic and trade activities will be eased. The external demand will play a more stable and sustainable role in driving China’s exports, and travel expenditures such as studying abroad may slowly pick up. The highlights, I just mentioned, are that China’s manufacturing sector is large, diversified and resilient. China’s supply-side structural reform and industrial transformation and upgrading have made great progress. As a result, China’s position in the global value chain will continue to rise. All these will support China’s current account surplus to stay within a reasonable and balanced range, and these supports are relatively solid. This is our preliminary assessment.

Thank you.

2022-01-21 10:41:49

The Paper.cn:

Some analysts believe that the Federal Reserve may adopt a more aggressive combination of policies to raise interest rate and shrink its balance sheet to boost the economy this year. How will the SAFE forecast its impact on China’s balance of payments and foreign exchange market? What policy tools will be adopted to respond? Thanks.

2022-01-21 11:11:58

Wang Chunying:

Thanks for your question. At present, the monetary policies of the developed economies, especially the U.S., tend to normalize. When we are faced with this problem, we have to think about what happened in the last round of tightening. At that time, we faced a certain pressure of capital outflow, so what will happen this round. Therefore, we have made a comparative analysis of the situation in the previous round and the current situation. Compared with the last round of the Fed’s monetary policy adjustment, in recent years, China’s economy has developed with high quality, with more prominent advantages in the industrial chain and supply chain. Besides, the opening of China’s financial market to the outside world has steadily advanced, the renminbi exchange rate formation mechanism has been continuously improved, and the stability of cross-border capital flows has been remarkably enhanced. Therefore, we can better cope with the changes in the external environment.

First, enterprises have abundant foreign exchange funds lately, mainly from export earnings. In recent years, China has steadily promoted the transformation and upgrading of its manufacturing sector, and the results have been fully reflected under the context of global pandemic. China’s exports have remained strong, becoming the dominant factor driving recent foreign exchange inflows. From 2020 to 2021, domestic foreign exchange deposits increased by US$160 billion, which was not leveraged capital inflow and helped improve the self-regulation of the foreign exchange market.

Second, the renminbi assets became more attractive with the opening of China’s financial market to the outside world. The increased allocation of foreign capital to renminbi assets has gradually become an important channel for cross-border capital inflows. It presents several characteristics. First, rapid growth rate. Since the capital market was further opened in 2017, foreign investment increased its net holdings of domestic bonds and stocks by more than US$700 billion from 2018 to 2021, with an average annual growth rate of 34%. Second, great potential for improvement. In the past, we have discussed this issue in every press conference. The proportion of foreign investment in China’s stock market and bond market remained at the level of 3%-5%, relatively lower than the developed and emerging economies such as Japan, South Korea and Brazil. Therefore, there is a great potential for future growth. Third, high investment value. renminbi assets have low correlation with asset prices and returns in developed and emerging economies, making it a very good choice for risk diversification in international investment portfolios. Therefore, with the opening of China’s financial market to the outside world, the renminbi assets have become more attractive. It was a new change after the last round of tightening.

Third, capital inflows including cross-border loans and trade financing were limited in the current round of quantitative easing (QE) of monetary policies in developed economies, and thus there will be little pressure for deleveraging. During the last round of QE by the Federal Reserve, the renminbi was still expected to appreciate, and more domestic entities borrowed a lot of low-cost money. As a result, when the QE came to an end, we were under great pressure as these foreign debts should be repaid. During this round of QE, market expectations for the renminbi exchange rate are overall stable. From the second quarter of 2020 to the second quarter of 2021, cross-border loans and trade financing increased by 8%, lower than the annual average growth rate of 21% during the last round of QE from 2009 to 2013. Therefore, in the second half of 2021, when the market expectations for Federal Reserve policy adjustment were enhanced, changes in related cross-border funds including cross-border loans and trade financing were relatively stable. Thus, the pressure for adjustment will be small in the future.

2022-01-21 11:12:17

Wang Chunying:

Fourth, the flexibility of the renminbi exchange rate has been significantly enhanced, and the maturity of the foreign exchange market has been constantly improved, which can better adapt to changes in the external environment. Here is a set of data. From 2018 to 2021, a short period after the ending of the last round of easing and tightening, the one-year historical volatility of the renminbi against the U.S. dollar was 3.9% on daily average, higher than the 2.2% from 2014 to 2015. Therefore, the renminbi exchange rate is now more flexible. It can reflect changes in the international environment and domestic foreign exchange supply and demand in a timely, adequate and accurate manner, which is conducive to the stability of market expectations and the orderly development of foreign exchange transactions.

With the Federal Reserve tightening monetary policy this time, its spillover effects may be smaller than in the previous round. According to our main judgment, economic growth and synchronization of monetary policy in the U.S. and non-U.S. major economies is better than in the previous round. The Federal Reserve attached great importance to communication and paid close attention to the latest situation of employment and inflation, while pricing in the international market made adjustment accordingly. Therefore, spillover effects have been partially released.

In addition, we are better adapted to changes in the external environment due to strong domestic economic fundamentals, sound structure in international balance of payment, stable current account surplus, and abundant foreign exchange reserves. Of course, with so many optimistic judgments just mentioned, we should still adhere to the bottom-line thinking. In the future foreign exchange administration work, we should coordinate development and safety, prioritize stability, and seek progress while ensure stability. We should improve the two integrated management framework of “macro prudential and micro supervision” in the foreign exchange market. Moreover, we have to be prepared all the time and make contingency plans for emergencies. Thank you.

2022-01-21 11:25:40

China Review News Agency Limited:

Some forecast that the balance of payments may show a dual surplus in 2021. What do you think about this? Thanks.

2022-01-21 11:25:45

Wang Chunying:

We have finished compiling the balance of payments for the first three quarters of 2021. Let me talk about the basics first. For the balance of payments in 2021, although we only released the data to the third quarter, we have also made a preliminary analysis for the fourth quarter. From the perspective of current account, I just mentioned that the current account surplus in the first three quarters of this year accounted for 1.5% of GDP, with a scale of US$196.3 billion, which fell within a reasonable and balanced range. The current account was relatively steady, and the surplus ratio was also reasonable. In the first three quarters, the financial account recorded a small surplus of US$41.8 billion. You mentioned dual surplus in your question. Regarding the financial account, one feature was the inflow of foreign capital. Being optimistic about the prospects of China’s economic development and market potential, the capital was willing to flow in. The capital with direct investment and long-term investment in particular, they were positive for China’s long-term development. Foreign capital was willing to allocate domestic renminbi assets including domestic stocks and bonds, because of their attractiveness. Both the surplus and deficit in international payments are the result of receipts and payments, with capital flowing in and out. In recent years, domestic investors have also increased their allocation of diversified assets. Therefore, the scale of our outward investment, the private sector’s outward investment I have just mentioned, was also very large. Viewing from the balance of payments, the financial account recorded a small surplus of US$41.8 billion in the first three quarters of last year. The foreign exchange reserve transaction increased steadily, and the reserve balance remained above US$3.2 trillion. This structure is likely to remain in place throughout 2021.

The situation in 2022 has already been covered in the first two questions, so I won't repeat them here. In general, we can observe this mainly from two aspects: current account and capital financial account, in which the change of reserves is reflected in the financial account. The dual surplus you mentioned implies that the reserves are taken out. Otherwise, it must be a surplus in the current account and a deficit in the capital account. So, I think the angle of observation is right. This is my response to your question.

2022-01-21 11:25:47

The Cover:

What did the SAFE do in 2021 to serve micro, small and medium-sized enterprises (MSMEs)? What will be the new initiatives in 2022?

Thank you.

2022-01-21 11:26:00

Wang Chunying:

Thank you for asking a very important question. MSMEs are very important in China. They contribute 80% of employment, 60% of GDP and 50% of tax revenue. The CPC Central Committee and the State Council attach great importance to the construction of service systems for MSMEs. In 2021, the SAFE earnestly implemented the decisions and arrangements of the CPC Central Committee and the State Council, and carried out a series of practical activities of “I do practical things for the people”. We continued to deepen the reforms to streamline administration, delegate power, and improve government services in the field of foreign exchange management. By doing so, we have implemented policies that benefit enterprises and effectively serve the MSMEs. This is a top priority of our work.

According to the statistics of foreign-related receipts and payments, in 2021, there were about 650,000 enterprises with foreign-related receipts and payments of less than US$1 million, accounting for 70% of enterprises engaging in this industry. Therefore, MSMEs are our very important service objects. We have highlighted the principle of precise policy implementation in carrying out our work, in consideration of the characteristics of MSMEs, such as, large in number, small size in trading volume, sporadic in transactions. We have mainly done the following work, and achieved some results. Here I give you a report.

Firstly, guiding enterprises to better cope with exchange rate risks with MSMEs as focus. First, we popularized the concept of exchange rate risk neutrality through multiple channels, including publicity through new media and offline trainings. We instructed the enterprises to effectively use products in the foreign exchange market to manage exchange rate risks, cope with changes in exchange rate, and operate more steadily. Second, we optimized the evaluation and incentive orientation. We introduced an incentive mechanism through evaluation in the hope of strengthening exchange rate hedging services for MSMEs through banks. Third, under further communication and coordination with commercial departments, we helped MSMEs to reduce the cost of hedging credit granting and margin in foreign exchange hedging through increasing credit support and special guarantees. Fourth, we encouraged financial institutions to provide low-cost exchange rate hedging services. We instruct the China Foreign Exchange Trade System to charge half the transaction fees for the foreign exchange derivatives services provided by banks for MSMEs. For the whole year of 2021, the foreign exchange hedging rate increased by 4.6%. More MSMEs have participated in hedging, and the number of first-run enterprises has increased significantly, which matters a lot. When the enterprises have obtained the benefits after the first attempt, they were willing to choose more hedging and value-preserving products in the future, so as to avoid the influence of exchange rate risk factors in their operations. Therefore, we put forward the first-run enterprises in the policy orientation.

Secondly, helping ease the difficulty and high cost of financing for MSMEs. In 2019, the SAFE took the lead in building a cross-border financial service platform, gradually establishing an information sharing and end-to-end verification mechanism among government departments, banking departments, insurance companies and enterprises. We have successively launched five financing scenarios and two foreign exchange facilitation scenarios. By the end of 2021, these scenarios have completed cross-border trade financing of more than US$120 billion, and facilitated the handling of foreign exchange business of US$560 billion. Many small and medium-sized foreign trade enterprises have benefited from these scenarios, effectively reducing corporate financial costs and bank risk control costs. It enhanced banks’ willingness to handle financing and significantly improved financing efficiency. These five financing scenarios include export receivables financing, authorization verification of cross-border credit information for enterprises, logistics financing settlement of the new land-sea corridor in western China, financing of export credit insurance policies, and financing of China-Europe Freight trains. For example, if you want to finance export accounts receivable, you can share the information with the financial service platform, and the bank can inquire on the platform. After obtaining the information, the bank will dare to make a loan to the enterprise, because the information is real, reliable and dependable. No matter how small the enterprise is, it can obtain financing because of these supports. This is very effective for serving MSMEs. In terms of policies to ease the difficulty and high cost of financing for MSMEs, we will further expand the scope of foreign debt facilitation trials and continue to support qualified high-tech MSMEs in borrowing foreign debt independently within the quota to reduce overall financing costs.

Thirdly, further facilitating the development of new trade formats for MSMEs. The market entities engaged in new trade formats such as cross-border e-commerce and market procurement are mainly MSMEs and privately or individually-owned business, with a large number of small-amount and high-frequency operations. In 2021, the SAFE continued to support payment institutions and banks to give full play to their advantages in cross-border settlement. They handled nearly 1.8 billion foreign exchange settlements in new trade formats, with a total amount of US$34.8 billion, and more than 70% of market purchases and trade settlements were handled online by enterprises themselves.
In 2022, we will continue to consolidate the above-mentioned effective policies and fully support the management of exchange rate risk hedging for MSMEs. To further negotiate with government departments, the cost of enterprises’ risk hedging will be reduced through joint efforts of the government, banks and third-party institutions. We will attract more enterprises to use derivatives to avoid concerns in the process of management and cope with problems of exchange rate risks. In this regard, we will increase the supply of policies, such as encouraging banks to provide more derivative products to serve enterprises, supporting banks to develop online trading services, and facilitating enterprises to conduct inquiries and transactions.

At the same time, we will further facilitate cross-border trade and investment for MSMEs. As I have mentioned just now, new application scenarios will be added to the cross-border financial service platform we established in 2019. For example, we will add the scenario of facilitating maritime freight payment, and expand the scope of insurance support in the application scenario of export credit insurance policy financing. Our work will be very detailed. We will try our best to develop different scenarios for MSMEs to meet their needs and provide them with good services. This is what government departments should do. We are doing it and will continue to proceed with it. We will encourage more small and medium-sized banks to participate in the pilot projects to facilitate foreign exchange payments, expand the scope of the pilot projects to facilitate foreign debt at an appropriate time, and help more high-tech MSMEs to conduct cross-border financing.

That’s all I want to share with you in regard to serving MSMEs. Thanks.

2022-01-21 11:38:51

Xinhua News Agency:

The Central Economic Work Conference proposed that, in 2022, we should adhere to the general principle of seeking progress while maintaining stability. What are the thoughts and policy measures of the SAFE in implementing the spirit of the Conference and promoting foreign exchange management in 2022? Thank you.

2022-01-21 11:46:10

Wang Chunying:

At the end of the year and the beginning of the year, we always have to review the past and plan for the future. In 2022, the SAFE will conscientiously implement the spirit of the Central Economic Work Conference by prioritizing stability, and seeking progress while maintaining stability. We will adhere to the implementation of new development concepts, build a new development pattern, and coordinate development and security. We will deepen the reform and opening-up in the foreign exchange field, maintain stable operation of the exchange market. Besides, we will serve the development of the real economy and contribute to macroeconomic stability and national economic and financial security. I want to talk about the main work of the SAFE in four aspects:

Firstly, deepening reform and opening-up in the foreign exchange sector. First, we will steadily and orderly advance high-level opening-up of capital accounts. For example, we will continue to expand the trials of cross-border investment by private equity funds, including optimizing QFLP fund raising, exchange and investment management, and standardizing QDLP investment operation and management. We will carry out reform to facilitate foreign debt. For example, the scope of one-off registration of foreign debt will be expanded. The trial area to facilitate foreign debt will be enlarged. The foreign debt contracts of pilot enterprises in some areas will be handled directly by banks. Besides, we will improve the management of funds for domestic issuance of stocks and bonds by overseas institutions and continue to pilot the integrated capital pools of domestic and foreign currencies by multinational companies. Second, we will promote reform and innovation in foreign exchange management under current accounts. We will expand trials to facilitate trade and foreign exchange receipts and payments, and support banks to include businesses with a large number of materials and links, and enterprises with a large number of transactions and good credit into the pilot program. We will support the standardized and innovative development of new foreign trade formats, and ensure convenient use of foreign exchange for the Winter Olympics. Third, we will build an open, diversified and well-functioning foreign exchange market and support financial institutions in launching more derivative products that meet market demand. Fourth, we will support regional opening-up and innovation, and do a good job in the implementation of high-level opening-up pilot projects for cross-border trade and investment.

Secondly, preventing and defusing the risk of external shocks. We will strengthen monitoring and early warning of foreign exchange situations, enhance risk prevention in key areas of foreign exchange. We will continuously improve cross-border capital flow, monitoring, early warning and response mechanisms. We will constantly enrich the policy toolbox and strengthen macro-prudential management and guidance in due course. In particular, we need to prevent “herd behavior” by market players.

Thirdly, improving the micro-supervision of the foreign exchange market. We will adhere to the cross-cycle consistency, predictability and stability of micro-supervision and law enforcement standards. We will establish authentic foreign exchange business management mechanisms with diversified methods, due diligence, safety and efficiency. We will also have zero tolerance to crack down on illegal activities in the field of foreign exchange, and earnestly safeguard national economic and financial security.

Fourthly, improving the management of foreign exchange reserves. We will promote capacity building in terms of professional investment, scientific and technological operation and management, and market-oriented institutional governance, so as to ensure the safety and flow of foreign exchange reserves as well as maintain and increase their value. Thank you.

2022-01-21 11:46:41

China Daily:

During the Beijing Winter Olympics, many foreigners will come to Beijing. What convenient measures will the SAFE provide to ensure the use of foreign exchange? Thanks.

2022-01-21 11:47:01

Wang Chunying:

The Winter Olympics is a big event for China, and it is also a great event for Beijing. In December 2021, the SAFE issued policies and measures to ensure the use of foreign exchange for the Beijing Winter Olympic Games, with the purpose of effectively improving the level of foreign exchange facilitation during the Beijing Winter Olympic Games. In the context of meeting the requirements of relevant departments for pandemic prevention and control and adhering to closed-loop management, further convenience will be provided. We have achieved agreement with the Bank of China, the official partner of the Beijing Winter Olympic Games, to open a foreign exchange “green channel” to facilitate the handling of foreign exchange service, including the opening of foreign exchange accounts, fund transfer and overseas personal mobile payment. We have introduced several measures:

First, simplifying the process. We will simplify the procedures and material review of foreign exchange business for individuals within the specified areas, provide foreign currency exchange and ATMs services for the Winter Olympics, and facilitate foreign individuals in the Beijing Winter Olympics-related areas to handle foreign exchange business.

Second, facilitating account opening. We will facilitate relevant domestic and foreign institutions to open foreign exchange settlement accounts under current account, and handle foreign exchange subsidies, bonuses and tax rebates.
Third, innovative services. We will support more banks to provide convenient services for foreign tourists in China to use mobile payment tools for small-amount consumption under the premise of controllable risks.

Fourth, handling special cases with special methods. During the Beijing Winter Olympic Games, in case of urgent and special foreign exchange business, we will provide policies allowing to handle special cases with special methods, so as to meet the needs of handling business.

Through these measures, we hope to provide convenient services for the overseas participants in the Winter Olympic Games to handle foreign exchange business, and make our due contribution to the Winter Olympic Games. Thanks.
2022-01-21 11:47:19

Yicai:

Just now, Ms. Wang mentioned that the renminbi appreciated to a certain extent in the second half of 2021. What we are concerned about is that the renminbi has recently risen above 6.34. What accounts for this appreciation? Will this appreciation continue in 2022? Thanks.

2022-01-21 11:48:21

Wang Chunying:

Thank you for your question. Although the exchange rate has become more flexible and fluctuated in both directions in recent years, the exchange rate issue still touches a nerve in everyone. Recently, the renminbi exchange rate has been stable on the whole, rising by 0.5% since 2022. Its recent stability was mainly due to the steady recovery of China’s economy and the strong resilience of exports. According to customs statistics, China’s import and export surplus increased by 30% in U.S. dollar terms. The surplus of our cross-border receipts and payments is relatively high, and the market expectations for the renminbi exchange rate are also relatively good, which are the factors that support the exchange rate.

There are also seasonal factors behind the slight appreciation of renminbi against U.S. dollar since the beginning of this year. Generally speaking, when the Spring Festival is approaching, most enterprises need to pay their employees’ wages and bonuses before the festival, so they are more willing to collect and settle foreign exchange. Speaking of exchange rate changes, the People's Bank of China (PBC) also gave their views at the press conference a few days ago, and we agree with them. China implements a managed floating exchange rate system based on market supply and demand, and adjusted with reference to a basket of currencies. In our view, the future trend of renminbi will be influenced by multiple factors such as market supply and demand, and the trend of international financial market. The exchange rate will become more flexible and will fluctuate in both directions.

When it comes to the exchange rate, it may indeed rise or fall. As a result, this is a manifestation of the function that renminbi exchange rate serves as an automatic stabilizer for the macro economy and the international receipts and payments, and it is also conducive to promoting internal and external balance.

That’s all I have to say about the exchange rate. Thank you.

2022-01-21 11:48:39

Shou Xiaoli:

Thank you, Ms. Wang. Thank you, friends from the press. This is the end of today’s press conference.

2022-01-21 11:48:58

(The original text is available on www.china.com.cn)

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