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The State Administration of Foreign Exchange (SAFE) has recently disseminated the preliminary data in the Balance of Payments for the fourth quarter and the whole year of 2018. The SAFE spokesperson and chief economist Wang Chunying answered media questions on relevant issues. Q: Could you brief us on China's balance of payments for 2018? A: In 2018, China's BOP found an adaptive equilibrium. Both current account and financial account (excluding reserve assets) were in surplus and reserve assets rose. The surplus under the current account remained within a reasonable range. In 2018, China's current account surplus was USD 49.1 billion. Although there was a deficit in the first quarter, it maintained surplus from the second quarter to the fourth quarter and the scale of surplus expanded quarter by quarter. In the fourth quarter, the current account surplus was USD 54.6 billion, up by 135% quarter on quarter, which was mainly attributed to a surplus of USD 139.1 billion, or a quarter-on-quarter increase of 38% under trade in goods in the Balance of Payments. The deficit of trade in services was USD 64.1 billion, down by 21% quarter on quarter. Financial account (excluding reserve assets) remained in surplus, and cross-border capital registered net inflow. In 2018, financial account (excluding reserve assets) posted a surplus of USD 60.2 billion (including net errors and omissions for the fourth quarter). Among which, direct investment registered a net inflow of USD 107.4 billion, up by 62% year on year. Specifically, the net outflow of ODI was USD 96.1 billion, down by 6%, and the net inflow of FDI into China registered USD 203.5 billion, up by 21%. Reserve assets rose. In 2018, China's reserve assets increased by USD 18.9 billion due to the BOP transactions (excluding the impact of non-transaction factors such as exchange rate and price), among which, foreign exchange reserves increased by USD 18.2 billion. Thanks to China's sustained and sound economic development and long-term good prospects, the cross-border capital flows in the future will maintain overall stability and China's balance of payments will also remain basically balanced. 2019-02-15/en/2019/0222/1491.html
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The State Administration of Foreign Exchange (SAFE) has recently released the data on external debt as at the end of September 2018. The SAFE spokesperson and Chief Economist Wang Chunying answered media questions on relevant issues. Q: Could you brief us on China's external debt for the third quarter of 2018? A: China witnessed growth in external debt for the third quarter of 2018. As at the end of September, China's full-scale outstanding external debt (including foreign currencies) amounted to USD 1.9132 trillion, up by USD 42.7 billion or 2.3% from the end of June, mainly due to the growth of the balance of trade credit and prepayment and of debt securities. Q: What are the main reasons for the growth of China’s outstanding external debt in the third quarter? A: First, the scale of China’s import and export trade increased steadily in the third quarter. In particular, the import trade increased by nearly 19% from the same period last year, and the balance of trade financing increased accordingly. Second, in recent years, with the gradual acceleration of China’s bond market opening to the outside world, foreign investors have continued to increase their holdings of domestic bonds, and the proportion of debt securities in China’s full-scale external debt has been rising steadily. As of the end of September 2018, the proportion of debt securities was 22.4%. As the global economic situation faces many uncertainties in the future, the SAFE will continue to closely monitor changes in external debt situations, guard against risk of cross-border capital flows and safeguard national economic and financial security. 2018-12-28/en/2018/1228/1481.html
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Q: The latest data on foreign exchange reserves disseminated by the People's Bank of China show that China's foreign exchange reserves by the end of November 2018 rose by USD 8.6 billion month on month. My question is what caused such changes in foreign exchange reserves and how the foreign exchange reserves will change in the future? A: By the end of November 2018, China's foreign exchange reserves stood at USD 3,061.7 billion, up by USD 8.6 billion or 0.3% from the end of October. In November, China's balance of payments continued to maintain steady operation. Affected by change in expectation of US monetary policies and fluctuations of international oil prices, bond prices of major countries rose slightly on the whole, while the US dollar index increased marginally amid fluctuations. Due to the combined impact of exchange rate translation and asset price changes etc., the foreign exchange reserves witnessed an increase. Since the beginning of this year, the instabilities and uncertainties in the external environment have increased remarkably. However, China's economy has maintained overall stability and made steady progress. The RMB exchange rate has showed an increased two-way floating elasticity, supply and demand in the foreign exchange market has maintained basic equilibrium, and cross-border capital flows have been stable on the whole. Looking ahead, although there are many uncertainties in the global economy and finance, the long-term positive fundamentals of China's economy has remained unchanged. As China continues to expand reform and opening-up, the impetus and momentum for China's economic development will be further strengthened, thus laying a solid foundation for the overall stability of the foreign exchange market. Under the combined impact of internal and external factors, China's foreign exchange reserves are expected to remain stable amid fluctuations. 2018-12-07/en/2018/1207/1477.html
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The State Administration of Foreign Exchange (SAFE) held a press conference on the foreign exchange receipts and payments for the first half of 2018 in the State Council Information Office on Thursday, July 19, 2018 at 10 am and answered press questions. Moderator Hu Kaihong: Good morning, ladies and gentlemen. Welcome to the press conference held by the State Council Information Office. Today we are very glad to invite Ms. Wang Chunying, Director of the Department of Balance of Payments of the State Administration of Foreign Exchange (SAFE). First of all, let’s welcome Director Wang to make an introduction. 2018-07-19 10:00:00 Wang Chunying: Good morning, everyone. Welcome to today's conference. I would first like to unveil foreign exchange receipts and payments for the first half of this year, and then answer your questions. In the first half of 2018, the global economic recovery has slowed down but maintained overall stability, and the fluctuation of the international financial market has increased.China's economic operation has maintained an overall stable trend with improved development. The results in transformation and upgrading have been outstanding and quality and efficiency have continued to improve. The exchange rate of RMB against US dollar fluctuates in both directions, and the exchange rate is expected to be basically stable. The SAFE adheres to the general tone of steadiness with progress, and further deepens the reform and opening-up of foreign exchange administration around promoting the formation of a new pattern of comprehensive opening-up. Overall, in the first half of 2018, China's cross-border capital flows were generally stable, and supply and demand in the domestic foreign exchange market were basically balanced. 2018-07-19 10:01:30 Wang Chunying: Banks settled foreign exchange in the amount of RMB 5.91 trillion (equivalent to USD 928.2 billion) and sold foreign exchange in the amount of RMB 5.82 trillion (equivalent to USD 914.4 billion) for the first half of 2018, with a surplus of RMB 88 billion (equivalent to USD 13.8 billion). The data on banks' foreign-related receipts and payments for customers show that banks' foreign-related receipts for customers amounted to RMB 10.86 trillion (equivalent to USD 1.71 trillion), and their external payments hit RMB 10.94 trillion (equivalent to USD 1.72 trillion), representing a deficit of RMB 74.6 billion (equivalent to USD 12.1 billion). China’s foreign exchange receipts and payments for the first half of the year present the following characteristics: First, banks’ foreign exchange settlement and sales turned from deficit to surplus, and deficit of foreign-related receipts and payments declined.In the first half of 2018, in US dollar terms, foreign exchange settlement by banks was up by 20% year on year, and foreign exchange sales by bank was up by 6%, resulting in a surplus of USD13.8 billion, from a deficit of USD93.8 billion in the same period last year;banks' foreign-related receipts for customers were up by 23% year on year, and the payments up by 17%, leading to a deficit of USD 12.1 billion, representing a decrease of 86% year on year. 2018-07-19 10:01:48 Wang Chunying: Second, the supply and demand of foreign exchange market maintained basic balance.Based on data on banks' foreign-related foreign exchange receipts and payments for customers, the first quarter and second quarter of 2018 registered a surplus of USD15.8 billion and USD4.6 billion respectively. Except for February and March, all other months achieved surplus;The foreign exchange settlement and sales registered a deficit of USD18.3 billion in the first quarter, which turned into a surplus of USD32 billion in the second quarter.Overall, China’s foreign exchange supply and demand maintained basic equilibrium in the first half of this year. 2018-07-19 10:03:54 Wang Chunying: Third, the foreign exchange sales rate dropped while foreign exchange financing of enterprises maintained general stability.In the first half of 2018, the foreign exchange sales rate which measures the willingness to buy foreign exchange, or the ratio of foreign exchange purchased by customer from banks to customer’s foreign-related foreign exchange payments was 64%, down by 4 percentage points from the same period last year. The ratio for the first quarter and the second quarter was 64% and 63% respectively, indicating that the willingness of enterprises to buy foreign exchange declined as a whole while foreign exchange financing became more stable.At the end of June 2018, the balance of cross-border trade financing denominated in foreign currencies for imports such as refinancing and forward L/C etc. of enterprises rose by USD12.6 billion from the end of last year, while banks’ balance of foreign exchange loans in China maintained basically stable as compared with that at the end of last year. Fourth, the foreign exchange settlement rate climbed, indicating market players were less willing to hold foreign exchange.In the first half, the foreign exchange settlement rate that measures the wiliness to settle foreign exchange, or the ratio of foreign exchange sold to banks by customers to their foreign-related foreign exchange receipts was 66%, up by 3 percentage points year on year. To be specific, the ratio was 62% and 70% respectively for the first and second quarter, indicating rising wiliness of market players to settle foreign exchange. At the end of June, the balance of domestic foreign exchange deposits of banks decreased by USD19.3 billion from the end of last year, while the same period last year registered an increase of USD41.4 billion. 2018-07-19 10:04:46 Wang Chunying: Fifth, bank’s forward foreign exchange settlement and sales registered a small deficit. In the first half of 2018, the value of forward foreign exchange settlement contracted by banks for customers was up by 91% year on year, while that of forward foreign exchange sales contracted was up by 163%, leading to a deficit of USD 24.8 billion in forward foreign exchange settlement and sales contracted with banks. Specifically, forward foreign exchange settlement and sales contracts posted a deficit of USD17.8 billion in the first quarter, a deficit of USD7 billion in the second quarter, with deficit narrowed by 60% quarter-on-quarter. Sixth, foreign exchange reserve maintained overall stability. As of the end of June 2018, affected by non-trading factors such as exchange rate conversion and asset price changes, the balance of China’s foreign exchange reserves stood at USD3,112.1 billion, down by USD27.8 billion from the end of 2017. These are the data unveiled and characteristics of China’s foreign exchange receipts and payments in the first half year. 2018-07-19 10:05:45 ModeratorHu Kaihong: Thank you, Director Wang. Please mention the news organization you represent before you ask questions. 2018-07-19 10:08:01 CCTV reporter: What changes have taken place in the situation of cross-border capital flows in the first half of this year? Could you tell us something about this change and how do you evaluate it? 2018-07-19 10:08:45 Wang Chunying: Thank you for your question. This year, especially since the second quarter, the international financial market has changed considerably. We see that the US dollar exchange rate has changed its previous downward trend, and the US dollar interest rates have also risen, some emerging economies have been relatively impacted, global trade frictions have intensified, risk aversion of markets has increased, and fluctuation of international capital markets has increased.Therefore, the complexity, fluctuation and uncertainty of the external environment have increased significantly. However, under this context, the domestic economy in the first half of the year has remained stable, opening-up has continued to deepen, the foreign exchange market has maintained a relatively stable pattern, and the overall performance has been outstanding. We can make two comparisons and share with you the situation of cross-border capital flows in China in the first half of this year. First of all, from the vertical comparison, China's foreign exchange market operation in the first half was more stable and balanced than that of previous years.On the one hand, there was a surplus in the banks' foreign exchange settlement and sales and cross-border foreign exchange receipts and payments, while there were relatively large deficit in the same period before.In the first half of this year, the surplus of banks' foreign exchange settlement and sales was USD13.8 billion, while for the first half of 2015 to 2017, the deficits were USD105.4 billion, USD173.8 billion and USD93.8 billion respectively.In the first half of this year, the surplus of banks' foreign-related receipts and payments for customers was USD20.4 billion while for the first half of 2015 to 2017, the deficits were USD22.8 billion, USD25.9 billion and USD14.3 billion respectively.From this perspective, both the foreign exchange settlement and sales and the cross-border foreign exchange receipts and payments witness surpluses, which have changed greatly compared with previous years. 2018-07-19 10:10:06 Wang Chunying: On the other hand, viewed from the vertical comparison, the two-way fluctuation of RMB exchange rate has intensified, market expectations have been reasonably differentiated, and the trading behaviors of market players have become more diversified.In the first half of this year, the exchange rate of RMB against the US dollar showed a two-way fluctuation of rising first and falling afterwards. The banks’ foreign exchange settlement and sales and cross-border receipts and payments in different months witnessed alternation of slight surplus and deficit, rather than the previous one-way change, which reflects the fact that market players tend to decide and arrange their cross-border receipts and payments as well as foreign exchange settlement and sales in light of their actual demands. 2018-07-19 10:21:12 Wang Chunying: Horizontal comparison shows that China's foreign exchange market and RMB exchange rate are relatively stable across the globe.In the first half of this year, the US dollar index rose by 2.7%, indicating that the currencies of major developed economies fell by 2.7% against the US dollar. EMCI fell by 7.3%; meanwhile the middle rate of RMB against the US dollar slightly fell by 1.2% and the CFETS of RMB slightly increased by 0.9%. During the turbulent period of emerging markets, because of the stable economic fundamentals, good balance of payments, the level of external liabilities within the safety range, and relatively abundant foreign exchange reserves, China has effectively responded to external shocks, and our cross-border capital flows have not been greatly affected. Therefore, both from vertical and horizontal comparisons, in the first half of the year, when the external environment fluctuation rises, cross-border capital flows in China have been generally stable, supply and demand in the foreign exchange market have been basically balanced, and the two-way fluctuation of RMB exchange rate has intensified. 2018-07-19 10:25:03 Reporter of People's Daily Overseas Edition: Under the background of Sino-US trade friction, will our pressure of cross-border capital outflow increase in the future?At the same time, how will the operation of the foreign exchange market be affected? 2018-07-19 10:30:32 Wang Chunying: Sino-US trade friction is a matter of great concern to all of us. We are also very concerned about it whose future evolution needs to be continuously observed.As regards impact on cross-border capital flows and foreign exchange market operation as you just mentioned, I would like to make a few comments. Firstly, from the perspective of China's economic fundamentals, China's economic resilience, adaptability and large space for maneuver are the solid foundation for the smooth operation of the foreign exchange market. At present, China's economic growth has shifted from mainly industry driven to industry and services driven, from mainly investment driven to investment and consumption driven, and from a major exporting country to a major exporting and importing country. All these changes have enhanced the stability and resilience of China's economy.Moreover, China's economy is now entering a stage of high-quality development, especially as the manufacturing industry chain is complete, and the transformation and upgrading is steadily advancing, China’s comparative advantage in the world will continue to exist and further consolidate. In the first half of this year, the national fixed assets investment (excluding farmers) increased by 6.0% year on year, of which the investment on high-tech manufacturing industry increased by 13.1% year on year, whose growth rate was 7.1 percentage points faster than that of the total investment.This is also directly related to the fact that we are in the high-quality development stage and our focus is on the upgrading of the manufacturing industry.In addition, the domestic market has huge potential, financial risks are generally controllable, foreign exchange reserves are sufficient, space for policy regulation is large, and we have conditions, capabilities and confidence to meet various challenges. 2018-07-19 10:31:38 Wang Chunying: Secondly, from the perspective of fundamentals of China's policy, adhering to the goal of reform and opening-up will create favorable conditions for the balanced flow of cross-border capital in China. This year marks the 40th anniversary of China's reform and opening up. When President Xi Jinping attended the Boao Forum in Asia in April, he once again demonstrated China's determination to expand its opening up. Recent relevant measures have been actively promoted. For example, in early June, the State Council issued a circular on the utilization of foreign capital, putting forward six measures: investment liberalization, facilitation, investment promotion and protection, regional opening up optimization, and promoting innovation and upgrading of national development zones, so as to further create a fair, transparent, convenient and more attractive investment environment.Moreover, for example, the 2018 version of Negative List of Foreign Investment Access issued at the end of June has reduced items from 63 to 48, and a series of major opening up measures have been introduced, including a substantial expansion of the opening up of services in the fields of finance, infrastructure, transportation, trade and circulation, a basic opening up of manufacturing industries and easing access to fields like agriculture and energy resources.In addition, the domestic capital market has been further opened up, and major international indices have gradually been incorporated into the stock market and bond market, which have shown relevant effects.In the first half of this year, the net cross-border capital inflows of foreign securities investment in China increased by two times over the same period last year. At present, the share of foreign investors in domestic stock market and bond market is less than 3% and 2%. Compared with the major developed countries and some emerging market economies, the proportion is low, and there is still much room for growth in the future. 2018-07-19 10:37:33 Wang Chunying: In addition, over the past few years, we have further accumulated management experience and enriched policy instruments in dealing with external pressures.The SAFE will continue to adhere to the general tone of steadiness with progress. On the one hand, the reform of foreign exchange administration will be deepened to promote the two-way opening up of financial markets and serve the new pattern of comprehensive opening up in China. On the other hand, the stability of the foreign exchange market will be maintained to guard against the risk of cross-border capital flows, safeguard the security, liquidity, value preservation and appreciation of foreign exchange reserves, and safeguard the national economic and financial security. Generally speaking, the economic and policy fundamentals closely related to the operation of China's foreign exchange market remain stable, and cross-border capital flows and the operation of China's foreign exchange market have conditions to maintain overall stability. 2018-07-19 10:43:52 Nikkei reporter: Deficit occurred in China's current account in the first quarter. What impact do you think it will have on China's cross-border capital flows? 2018-07-19 10:45:43 Wang Chunying: Thank you for your questions. In the first quarter of this year, China's current account witnessed slight deficit, but it has tended to be balanced.This change has drawn much concern so I would like to take this opportunity to share some views with you on this issue. First, in recent years, China's current account continued to reach basic equilibrium of receipts and payments, which it is still in.In 2016 and 2017, the ratio of surplus under the current account to GDP was 1.8% and 1.3% respectively. The ratio of surplus to GDP in some quarters was as low as 0.5%.This shows that in recent years, China's current account has reached a very stable range of receipts and payments, and a small surplus can easily turn into a small deficit in a certain period, both of which fall into the range of basic equilibrium. In practice, international studies have shown that whether the deficit under the current account continues to exceed about 5% of GDP is a very critical early warning indicator.Therefore, in the first quarter of this year, China's current account is still within a stable and healthy reasonable range. 2018-07-19 10:48:08 Wang Chunying: Secondly, the basic equilibrium of receipts and payments under the current account in China reflects the effect of domestic economy transforming to high-quality development, and it is also an important contribution to global economic rebalancing. Balance of payments is an external manifestation of the operation of the domestic economy. The current account status of the balance of payments mainly reflects the characteristics of two aspects of China's domestic economic development in recent years. On the one hand, it shows that substantial progress has been made in China's economic restructuring, and the role of domestic demand in economic growth has been significantly enhanced.According to the estimates of the National Bureau of Statistics, from 2008 to 2017, the annual contribution rate of domestic demand to China's economic growth reached 105.7%. Among them, final consumption expenditure has been the first engine of China's economic growth for five consecutive years, and the contribution rate of final consumption expenditure to economic growth reached 78.5% in the first half of this year. This shows that substantial progress has been made in China's economic restructuring; that is, the role of domestic demand in economic growth has been significantly enhanced.On the other hand, it reflects the continuous growth of residents' income and the upgrading of consumption. With the continuous improvement of people's living standards and the rapid rise of consumption, it is normal for people to increase their demand for imported goods, outbound tourism and studying abroad. In addition, China's balance of payments approaching basic equilibrium is also very important for global economic rebalancing. 2018-07-19 10:55:11 Wang Chunying: Thirdly, China's economic development model determines that it is impossible for China's current account to sustain a large deficit in the future.Looking from the history of economic development worldwide, most of the economies with developed manufacturing, such as Germany, Japan, Korea and Taiwan China, have maintained surplus under the current account for a long time, and the occurrence of deficit was rare or the duration of deficit was very short. If the surplus fell, it usually occurred in the stage of transformation and upgrading. China's manufacturing industry will be in a very important position in the national economy for a long time. It has a very mature manufacturing infrastructure. What cannot be ignored is that we have a large number of skilled workers, our industrial chain is relatively complete and our competitiveness in the world is still relatively strong. At present, we are in the process of transformation and upgrading from middle and low-end industries to middle and high-end industries. This upgrading will still help to maintain a reasonable surplus under trade in goods in the medium and long term. At the same time, China's consumption upgrading will gradually move from a fast rising period to a stable period. For example, the growth rate of rapidly increasing overseas tourism and studying abroad in recent years has stabilized, and this trend is also in line with international experience. 2018-07-19 10:58:53 Wang Chunying: Therefore, from the above aspects, China's current account balance will remain within a reasonable range in the future. 2018-07-19 11:05:06 Reporter of South China Morning Post: It is estimated that the Sino-US trade war will lead to capital outflow from China. If there is capital outflow, what measures will the SAFE take to cope with it? 2018-07-19 11:07:52 Wang Chunying: Preventing the risk of cross-border capital flows is an important task of foreign exchange authorities. We are highly concerned about the situation of cross-border capital flows.What you asked was a hypothetical question, but the current operation of our foreign exchange market is relatively stable.We have calculated the recent data performance; since June 25 this year, market fluctuations have increased, but from daily data of individual foreign exchange settlement and sales and cross-border capital flows of non-banking sector, it was far from reaching the period with higher pressure of capital outflow in 2015 and 2016, and the average deficit of individual foreign exchange settlement and sales was only 28% of the daily average on the month with highest pressure at that time. And the daily net outflow of cross-border capital was only 12% of the daily average on the month with highest pressure at that time.So your hypothesis didn't come up. 2018-07-19 11:08:56 Wang Chunying: To guard against the risk of cross-border capital flows, we continue to enrich our response plans and policy reserves, and always adhere to two basic considerations.The first is to deepen the reform of foreign exchange administration, promote the two-way opening up of financial markets and serve the new pattern of comprehensive opening up in China.The second is to maintain the stability of the foreign exchange market, guard against the risk of cross-border capital flows, safeguard the security, liquidity, value preservation and appreciation of foreign exchange reserves, and safeguard the national economic and financial security. In the long run, while accelerating the reform of key areas and links of foreign exchange administration, we will continuously improve and optimize macro-prudential management and micro-market supervision of cross-border capital flows.First, establishing a macro-prudential management system for cross-border capital flows, counter-cyclically adjusting short-term fluctuations in the foreign exchange market, and safeguarding the security of the financial system and the equilibrium of balance of payments.Second, improving the micro-regulatory framework of the foreign exchange market, cracking down on foreign exchange irregularities to maintain the order of the foreign exchange market. 2018-07-19 11:22:54 Wang Chunying: As for macro-prudential policy, first, the monitoring, early warning and response mechanism of macro-prudential management of cross-border capital flows should be established and improved.Secondly, the toolbox of macro-prudential management of cross-border capital flows should be enriched, which will be adjusted continuously according to the changing situation and open policies, including the risk reserve used in the past, and macro-prudential management policies focusing on banks and short-term capital flows. As for the supervision of micro-market, the first is to adhere to the verification of authenticity, compliance and legality, fulfill the obligations of anti-money laundering, anti-terrorist financing and anti-tax avoidance, and protect the legitimate rights and interests of market players. The second is to maintain the stability and consistency of policies across cycles. The third is to adhere to the principle of "leaving traces" in cross-border transactions and strengthen penetrating supervision. 2018-07-19 11:29:11 China Daily reporter: Since this year, the spreads between China and the United States have narrowed as a whole, and the Federal Reserve will continue to raise interest rates in the future. Will this put some pressure on China's capital outflow? 2018-07-19 11:34:25 Wang Chunying: Thank you for your question. The impact of interest rate spreads on cross-border capital flows needs to be analyzed and judged more comprehensively. Spreads do affect cross-border capital flows, but they are not the only or fundamental factor.We can cite several examples: First, in recent years, the interest rate of the US dollar has been significantly higher than that of the Euro zone and Japan, but international capital has not flowed from Europe and Japan to the United States continually, and the exchange rate of the US dollar has not continued to appreciate in the past few years.It shows that international capital needs to consider the comparison of economic growth expectations, monetary policy adjustment, and the resultant exchange rate changes, and also the decentralization of different assets.Secondly, historically, in order to curb capital outflow, many emerging economies raised interest rates by a large margin, even to tens of percentage points, but they failed to attract more capital inflows or retain domestic capital outflow. The related risks brought by economic vulnerability is a very important consideration for all kinds of investment capital.Thirdly, for most of the time period from 2006 to 2007, the interest rate of RMB in China was lower than that of US dollar. At that time, we were faced with continuous net cross-border capital inflows, which showed that factors such as domestic economic conditions, long-term investment prospects and RMB exchange rate expectations had significantly greater impact than that of spreads.So we say that spreads will affect cross-border capital flows, but they are not the only nor the most fundamental factor. 2018-07-19 11:35:38 Wang Chunying: Therefore, factors such as relatively stable economic fundamentals, still high comprehensive investment returns, and increasingly improving demand for RMB asset allocation will have a more important impact on China's cross-border capital flows. First, the uncertainties in the current international financial market have increased and investment risks have increased. However, China's economic fundamentals are generally stable with progress, and the overall social and political situation is stable. At present, China is in the deepening period of reform and opening up. A stable investment environment and huge market development space are still conducive to attracting investment. Secondly, the comprehensive return of overseas investment in China is still very high.According to the data of balance of payments, we estimate that the average return on investment of all kinds of capital coming to China in 2017 was 5.9%. Among them, the return on direct investment in China was higher, which was obviously higher than that of foreign direct investment in developed countries like Europe and America. Thirdly, China's securities market has been continuously opened up to the outside world. At present, RMB assets are still in the stage of low allocation in international capital investment. Just now, I mentioned that the market value of foreign investors in stock market and bond market is less than 3% and 2%, respectively, so there is great room for improvement in the future. Fourthly, the two-way fluctuation of the RMB exchange rate against the US dollar has increased, and it is a relatively stable and powerful currency in the global currency.According to the daily data released by the Bank for International Settlements, it is estimated that CFETS of RMB appreciated by 2.8% in the first half of this year, ranking 10th out of 61 currencies monitored by the Bank for International Settlements. 2018-07-19 11:38:36 Wang Chunying: In addition, the impact of the Federal Reserve raising interest rate on the long-term interest rate of the US dollar needs to be observed.Looking back on 2017, the Federal Reserve raised interest rates three times, but the yield of 10-year Treasury bonds remained basically unchanged. Market expectations of the U.S. economic outlook and other factors will affect its long-term interest rate movements. These are my views on your questions. Thank you. 2018-07-19 11:41:44 Economic Daily reporter: How has China's external debt changed since the beginning of this year, and would you please analyze the causes and risks of this change? 2018-07-19 11:44:47 Wang Chunying: According to the latest published data, at the end of March this year, China's total external debt balance reached USD 1,843.5 billion, an increase of USD132.9 billion over the end of last year. From the perspective of term structure, China's external debt structure has been further optimized, and the proportion of short-term external debt has declined significantly.At the end of March this year, the medium- and long-term external debt balance accounted for 36% of the total external debt, which was basically the same as that at the end of 2017, up by 9 percentage points from that at the end of 2014 when the full-scale external debt statistics were first published.We have observed that 80% of the newly growing external debt is debt securities. Foreign investors have increased their investment in China's medium- and long-term bonds, reflecting their confidence in China's long-term economic growth. At the end of March, the ratio of outstanding short-term external debt was 64%, which was the same as that at the end of 2017, down by 9 percentage points from that at the end of 2014. 2018-07-19 11:45:19 Wang Chunying: According to the classification of debt instruments, the growth of money and deposits, and debt securities is obvious. The increase of both accounts for about 70% of the total increase of external debt, which is mainly because of the increased deposits in domestic banks by overseas non-resident institutions and individuals. Meanwhile, the willingness of overseas non-resident institutions to invest in domestic bond market is strong. Overall, China's external debt risk is controllable.Several external debt risk indicators, such as liability ratio, debt ratio, debt servicing ratio, are within the safety line of international standards. Preliminary judgment shows that China's outstanding external debt will grow steadily in the second quarter, which is conducive to promoting domestic market players to make better use both the domestic and international resources and markets under controllable risks. Thank you. 2018-07-19 11:46:25 Moderator Hu Kaihong: This is the end of today's conference. Thank you, Director Wang! Thank you all! (The original text is available at www.china.com.cn) 2018-07-19/en/2018/0719/1475.html
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The State Administration of Foreign Exchange (SAFE) has recently released the Balance of Payments (BOP) and International Investment Position (IIP) for the first quarter of 2018. Its press spokesperson answered media questions on relevant issues. Q: Could you brief us on China's balance of payments for the first quarter of 2018? A: China's BOP found an adaptive equilibrium in the first quarter of 2018. The financial account excluding reserve assets was in surplus, the receipts and payments under the current account were further balanced and reserve assets rose. The financial account excluding reserve assets registered a higher surplus. In the first quarter, the financial account excluding reserve assets recorded a surplus of USD 98.9 billion, growing 1.7-fold year on year. On the one hand, outbound investments stayed stable. In the quarter, the external financial assets arising from BOP transactions jumped by USD 72 billion net, up by 32% year on year. Specifically, ODI went up by USD 17.9 billion net, external securities investment rose by USD 33.5 billion net, and other investments such as external deposits and loans increased by USD 20.8 billion net. On the other hand, overseas investors continued to increase investments in China. In the quarter, external liabilities grew by USD 170.9 billion net. To be specific, FDI grew by USD 73 billion net, securities investment in China rose by USD 43.8 billion net; and other investments in China such as non-resident deposits attracted and overseas loans obtained jumped by USD 54.4 billion net. The receipts and payments under the current account were further balanced. In the first quarter, the current account registered a deficit of USD 34.1 billion. The surplus under trade in goods shrank as imports outpaced exports. Driven by the higher deficit under transportation and travel, trade in services recorded an increased deficit. The balance of the current account contributed -1.1% to China's GDP, which was within the reasonable range though. Reserve assets rose. In the first quarter, China witnessed an increase of USD 26.2 billion in reserve assets as a result of BOP transactions (excluding non-trading factors such as foreign exchange rates and prices), versus a decrease of USD 2.6 billion a year earlier. In particular, foreign exchange reserves went up by USD 26.6 billion and its reserve position in the IMF decreased by USD 400 million. Q: What would you say about China's international investment position for March 2018? A: As at the end of March, China's international investment position remained robust, with external assets and liabilities rising from a year earlier. China recorded USD 1.5725 trillion in net external assets as at the end of March. To be specific, China's external assets amounted to USD 7.0252 trillion and its external liabilities hit USD 5.4527 trillion, up by 1.4% and 6.7% quarter on quarter respectively (same below). External assets went up. Specifically, direct investment assets rose by USD 24.5 billion or 1.7%; securities investments picked up by USD 17.3 billion or 3.5%; financial derivative assets perked up by USD 1.8 billion or 30.1%; other investment assets climbed by USD 51.5 billion or 3.0%; and reserve assets increased by USD 4.4 billion or 0.1%. External liabilities rose. Direct investment liabilities rose by USD 165.5 billion or 5.7%, owing to higher direct investments of foreign investors in the Chinese market, as well as foreign exchange rate conversion along with RMB appreciation; securities investment liabilities increased by USD 109.6 billion or 10.5%, as a result that foreign investors increased their holding of securities issued by China domestically and globally, as well as of value reassessment; financial derivative liabilities grew by USD 700 million or 20.4%; and other investment liabilities went up by USD 65.3 billion or 5.6%. Looking at the items, we found from external assets that direct investment assets reached USD 1.4974 trillion, 21% of total assets; securities investment assets amounted to USD 514.5 billion, 7% of total assets; financial derivative assets were USD 7.8 billion, 0.1% of total assets; other investment assets reached USD 1.7652 trillion, 25% of total assets; and reserve assets hit USD 3.2403 trillion, 46% of total assets. Of external liabilities, direct investment liabilities hit USD 3.0670 trillion, 56% of total liabilities, making it No. 1 in external liabilities; securities investment liabilities reached USD 1.1535 trillion, 21% of total liabilities; financial derivative liabilities were USD 4.1 billion, 0.1% of total liabilities; and other investment liabilities amounted to USD 1.2281 trillion, 23% of total liabilities. 2018-06-29/en/2018/0709/1444.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' foreign exchange settlement and sales and banks' foreign-related receipts and payments for customers for April 2018. 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 April 2018? A: China's foreign exchange market remained stable in April. First, banks recorded a surplus of USD 10.6 billion in their foreign exchange settlement and sales in the month, and an accumulated deficit of USD 7.6 billion for January to April, indicating a relative equilibrium in the supply and demand in the foreign exchange market. Second, non-banking sectors such as enterprises registered a deficit of USD 9.9 billion in foreign-related receipts and payments in the month, and an accumulated surplus of USD 800 million for January to April, suggesting relevant market participants have maintained balanced cross-border capital flows in the year to date. In particular, a surplus of USD 900 million was recorded in foreign-related foreign exchange receipts and payments in the month. Third, the balance of China's foreign exchange reserves declined in the month, due to foreign exchange rate conversion and asset price correction. All these showed that the foreign exchange market has been operated stably. Major items on the supply and demand in the foreign exchange market presented a momentum for stable and orderly growth. First, trade in goods remained a major supply item of foreign exchange. The non-banking sectors like enterprises reported a surplus of USD 30.6 billion in foreign exchange settlement and sales under trade in goods in April, up by 84% month on month, which was generally aligned with the balance of foreign trade reported by the Customs and its movement trends. Second, a basic balance with slight earnings was registered in foreign exchange settlement and sales under the capital and financial account. In the month, the non-banking sectors recorded a surplus of USD 2.3 billion in foreign exchange settlement and sales under the capital and financial account, down by 42% month on month. Third, the deficit in foreign exchange settlement and sales under trade in services for enterprises and individuals dropped slightly but stably. In the month, the deficit was USD 17.8 billion, down by 19% month on month and by a slight 2% year on year. Foreign exchange purchases by individuals stayed steady. In the month, the amount of the contracts signed for forward foreign exchange settlement and sales rose by 1.6 and 3.1 times year on year respectively, leading to a surplus of USD 5 billion, indicating risk aversion associated with foreign exchange rate was remarkably strengthened under the impact of two-way fluctuations of the RMB exchange rate. Since the beginning of April, the global financial markets have witnessed heightened volatility. The USD exchange rate and interest rate were strengthened, emerging markets were under heavier pressure from capital outflows and currency depreciation, but China's cross-border capital flows stayed steady, indicating China's economic fundamentals have played a fundamental role in stabilizing the expectations of the foreign exchange market. Going forward, as China's economy continues to perform stably, China's foreign exchange market will adapt better to the changes in external environment and continue with the rational and balanced landscape of cross-border capital flows. 2018-05-18/en/2018/0613/1439.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' foreign exchange settlement and sales and banks' foreign-related receipts and payments for customers for May 2018. 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 May 2018? A: China's cross-border capital flows stay stable currently. In May, banks registered a surplus of USD 19.4 billion in foreign exchange settlement and sales, as a result that companies and individuals adjusted their domestic assets in RMB and foreign currencies as expectations of foreign exchange remained stable. The non-banking sector like domestic companies posted a deficit of USD 7.4 billion in foreign-related receipts and payments, 26% lower than that of April, while foreign-related foreign exchange receipts and payments recorded a surplus of USD 2.6 billion, which was relatively balanced. The balance of foreign exchange reserves fell by USD 14.2 billion in May, owing to the combined impact of depreciation of the non-USD currencies against the US dollars and higher asset prices. The domestic foreign exchange market continued stable operation. Cross-border capital flows through major channels grew stably and remained balanced. On the one hand, trade in goods remained as the major channel for net cross-border capital inflows and foreign exchange supply. In May, banks' foreign-related receipts and payments under trade in goods for customers (customs coverage) was in surplus and picked up by 42% month on month; banks' foreign exchange settlement and sales under trade in goods for customers was also in surplus and climbed by 32% month on month. The foreign-related receipts and payments and foreign exchange settlement and sales under direct investment and portfolio investment of domestic non-banking sector such as domestic companies remained in surplus. On the other hand, due to seasonal factors, companies' purchases of foreign exchange under returns of investment and individuals' purchases of foreign exchange both rose. In May, foreign exchange purchased under ROI neared USD 7 billion, up by 98% month on month; and foreign exchange purchased by individuals perked up by a slight 2% month on month but fell by 10% year on year. Moreover, as companies' risk aversion associated with foreign exchange rates became stronger, the amounts of the contracts signed for forward foreign exchange settlement and sales grew by 5% and 22% month on month respectively, or rose 1.3-fold and twice year on year. Banks' forward foreign exchange settlements and sales recorded a surplus of USD 1.7 billion, suggesting companies' overall expectations of foreign exchange rates remained stable. The global financial markets have continued to be volatile since May, with some emerging economies struggling with capital outflows and currency depreciation. Nevertheless, China's economy has stayed stable with a strong momentum for growth. The market expectations have been stabilized and changes in external environment have been dealt with, providing a fundamental guarantee for the stable operation of China's foreign exchange market. 2018-06-19/en/2018/0709/1443.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated China's external debt data as at the end of March 2018, and an official from the SAFE answered media questions on recent situations of China's external debt. Q: Could you brief us on China's external debt for the first quarter of 2018? A: China's external debt continued rising in the first quarter of 2018. As at the end of March 2018, China's full-scale outstanding external debt registered USD 1.8435 trillion (in both domestic and foreign currencies), up by USD 132.9 billion or 7.8% quarter on quarter, primarily driven by the increases in currencies and deposits as well as debt securities. To be specific, the increases in currencies and deposits contributed 36% of the growth in total external debt, owing to the increased deposits of foreign non-resident institutions and individuals in domestic banks; the rise in debt securities accounted for 34% of the growth in total external debt, attributable to the strong interest of foreign non-resident institutions in investing in China's bond market. Q: What would you say about China's foreign debt situations? A: Overall, the rise in China's foreign external debt mirrored China's economic growth and wider opening up. First, China's economy got off to a good start in the first quarter. Its GDP grew by 6.8% year on year and foreign trade, 9.4% year on year, indicating the quality and benefits of China's economic growth have been improving, thus laying a foundation for the continued increase in its external debt. Second, as the domestic bond market has been further liberalized, coupled with the good performance of China's bond market in the year to date, foreign institutional investors have become enthusiastic for buying more RMB bonds in the Chinese market, and nearly 80% of them invested in medium and long-term bonds. As a result, the share of debt securities in full-scale external debt rose from 8% at the end of 2014 to 21% at the end of March, which has become the new growth driver of China's external debt, and also shows foreign investors' solid confidence in China's economy. Next, the SAFE will keep a keen eye on the changes in domestic and international conditions, improve the external debt and capital flow management system under the macro-prudential management framework. While boosting the facilitation of cross-border investments and financing, the SAFE will strengthen ongoing and ex-post monitoring and analysis to guard against the risks arising from unusual cross-border capital flows and safeguard China's economic and financial security. 2018-06-29/en/2018/0709/1445.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated the preliminary data in the Balance of Payments for the first quarter of 2018, and its press spokesperson answered media questions on relevant issues. Q: Could you brief us on the new characteristics of the balance of payments for the first quarter of 2018? A: The preliminary data in the Balance of Payments for the first quarter show that the current account was in deficit, the financial account (excluding reserve assets) (including net errors and omissions for the quarter, the same below) was in surplus, and reserve assets rose, with the main new characteristics as follows: First, the deficit in the current account was caused by seasonal factors and rapid increase in import of goods. In the first quarter, the current account recorded a deficit of USD 28.2 billion, with a surplus of USD 53.4 billion under trade in goods in the Balance of Payments, down by 35% year on year. To be specific, export of goods was USD 529.6 billion, up by 11% year on year, and import of goods was USD 476.2 billion, up by 21% year on year. The import growth outpaced the export growth, further balancing trade in goods. Moreover, as Chinese people are on holidays at the beginning of the year, the balance of trade in goods for the first quarter is usually at the low level of the year. It is expected that the receipt and payment under the current account will remain in a reasonable range throughout the year. Second, the financial account excluding reserve assets was in surplus, featuring net cross-border capital inflows. In the first quarter of 2018, the financial account excluding reserve assets registered a surplus of USD 54.5 billion, and cross-border capital recorded net inflows, which has been so since the second quarter of 2017. Third, FDI rose rapidly, suggesting overseas investors are optimistic about China's economic prospects. In the first quarter, China posted USD 50.2 billion in net inflows of direct investment, which was three times higher than that in the same period last year. For composition, ODI recorded net outflows of USD 18.1 billion, down by 12% year on year; and FDI registered net inflows of USD 68.2 billion, 1.1 times higher than that in the same period last year. Fourth, reserve assets continued to increase, resulting in an adaptive equilibrium in the balance of payments. In the first quarter, China's reserve assets rose by USD 26.2 billion due to BOP transactions (excluding non-transaction factors like foreign exchange rate and price). Specifically, foreign exchange reserves went up by USD 26.6 billion, compared with a decrease of USD 2.5 billion in the same period last year. Overall, China's balance of payments maintained a basic equilibrium in the first quarter, with cross-border capital continuing with net inflows, and reserve assets rising stably, indicating a solid foundation for the overall equilibrium in the balance of payments in the future. 2018-05-04/en/2018/0612/1437.html
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Q: The latest data disseminated by the People's Bank of China on foreign exchange reserves show that China's foreign exchange reserves as at the end of June 2018 rose USD 1.5 billion month on month. Could you tell us why such a change occurred? What would you say about the future trends of foreign exchange reserves? A: As at the end of June 2018, China's foreign exchange reserves recorded USD 3.1121 trillion, up by USD 1.5 billion or 0.05% month on month. In June China's foreign exchange market performed stably and the balance of payments found an adaptive equilibrium. But global financial markets were more volatile and the US Dollar Index picked up by a slight 0.5% because major non-USD currencies declined against the US dollars and asset prices changed. As a result, China's foreign exchange reserves climbed marginally. In the year to date, China's economy has maintained stability while ensuring progress and gained momentum for growth. But due to divergence of the global economic recovery and rising trade frictions, some emerging economies have been under the pressure of capital outflows and currency depreciation. Nevertheless, in China, market expectations have been stabilized thanks to the robust fundamentals, and cross-border capital flows have remained steady. Looking ahead, China will focus on the supply-side structural reform, deepening the reform and opening up and strengthening innovation drive, indicating China's economy is sophisticated enough to maintain stable growth, which will provide a fundamental guarantee for the stable operation of the foreign exchange market. On the other hand, as trade protectionism rises, the FED continues to hike interest rates and reduce balance sheets, and global liquidity is tightened, the uncertainties of external environment have been heightened. Under such factors at home and abroad, China's foreign exchange reserves are expected to stay stable amid fluctuations. 2018-07-09/en/2018/0709/1466.html