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The State Administration of Foreign Exchange (SAFE) recently released data on foreign exchange settlement and sales by banks as well as banks' foreign-related receipts and payments for customers for August 2018. The SAFE press spokesperson answered media questions on recent cross-border capital flows. Q: Could you brief us on China's cross-border capital flows for August 2018? A: China's foreign exchange market supply and demand continues to stay stable. At the end of August 2018, China's foreign exchange reserve balance was USD 3109.7 billion, down by USD 8.2 billion from the end of July, a drop of 0.26%. In August, Banks registered a deficit of USD 14.9 billion in foreign exchange settlement and sales, and an accumulated deficit of USD 10.5 billion so far this year, down by 91% year-on-year. The deficit in foreign-related receipt and payment of non-bank sectors such as domestic enterprises was USD 4.4 billion, narrowed by 63% month-on-month. The wider opening of the capital market to the outside world continues to attract international capital into China, and the purchase of foreign exchange by enterprises and individuals is rational and orderly. First, the net inflow of cross-border capital under portfolio investment increased rapidly. In August, the portfolio investment posted a surplus of USD 17.5 billion in foreign-related receipt and payment, rose by 2.9 times month-on-month. The portfolio investment registered a surplus of USD 4.3 billion in foreign exchange settlement and sales, which is the highest since July 2015. Second, the import trade financing of enterprises continued to increase. In August, the balance of cross-border financing for import trade such as refinancing and forward L/C grew by USD 2.3 billion month-on-month, and increased by USD 16.9 billion cumulatively so far this year. Third, the deficit in forward foreign exchange settlement and sales contracts narrowed down. In August, the deficit in forward foreign exchange settlement and sales contracts was USD 5.4 billion, down by 65% month-on-month. In addition, foreign exchange purchase under returns of investment fell due to seasonal factors, down by 33% month-on-month; individuals' purchases of foreign exchange picked up in the summer overseas travel season and the period before the back-to-school season, but fell by 2% year on year. At present, international trade frictions are intensifying, geopolitical tensions are rising, and economic and financial turmoil in some emerging market countries is expanding. However, China's foreign exchange market has still maintained overall stability in adverse external environment. In the future, although there still will be many external uncertainties, along with the transformation and upgrade of industries as well as the steady and thorough advancement of China's opening up, China's economic operation will continue to maintain in a reasonable range, the two-way fluctuation of RMB exchange rate is expected to become increasingly resilient, and the measures for macro-prudential management of cross-border capital flow will continue to play a role in counter cyclic adjustment. Therefore, China can effectively cope with external shocks, and safeguard the smooth operation of foreign exchange market. 2018-09-20/en/2018/0920/1463.html
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The State Administration of Foreign Exchange (SAFE) recently released the Balance of Payments (BOP) for the second quarter of 2018 and the International Investment Position (IIP) as of the end of June, 2018. A press spokesperson of the SAFE answered media questions on relevant issues. Q: Could you brief us on China’s balance of payments for the second quarter of 2018? A: Based on the balance of payments, China's current account and financial account (excluding reserve assets) recorded a "twin surplus" for the second quarter of 2018. The balance of reserve assets rose and the balance of payments remained basic equilibrium. First, in the current account surplus, the surplus of trade in goods increased while the deficit of trade in services was stable. In the second quarter of 2018, the current account recorded a surplus of USD 5.3 billion, among which trade in goods registered a surplus of USD 103.6 billion in the balance of payments, which doubled that of the previous quarter. A deficit of USD 73.7 billion was recorded under trade in services, flat quarter-on-quarter. Travel, transport and intellectual property fees remain major deficit items. Second, the financial account (excluding reserve assets) continued to show surplus, and the cross-border capital continued its trend of net inflow. In the second quarter of 2018, the financial account (excluding reserve assets) registered a surplus of USD 30 billion, with cross-border capital continuing the trend of net inflows since the first quarter of 2017. The breakdowns are as follows: Direct investment recorded a net inflow of USD 24.8 billion, which are relatively high in both directions. To be specific, ODI recorded a net outflow of USD 27.9 billion, and FDI, a net inflow of USD 52.7 billion. The net inflow of portfolio investments reached USD 61 billion, hitting a quarterly record high. Of this, the net outflow of external portfolio investment was USD 4.3 billion while the net inflow of portfolio investment in China hit USD 65.2 billion. Third, reserve assets rose. In the second quarter of 2018, China's reserve assets rose by USD 23.9 billion as a result of the BOP transactions (excluding the impact of non-transaction factors such as exchange rate and price), among which, foreign exchange reserves increased by USD 22.9 billion. Q: Could you brief us on China's international investment position for the second quarter of 2018? A: According to the international investment position statement, China's overall international investment position remained robust at the end of June 2018. China recorded USD 1.7402 trillion in net external assets, up by 10.7% from the end of March, and the reserve asset size remained the first place in the world. The main characteristics are as follows: First, external financial assets increased to a record high. China's external assets reached USD 7.0377 trillion at the end of June 2018, up by 0.2% from the end of March. To be specific, ODI assets rose by 1.7% to USD 1.5222 trillion. External portfolio investment totaled USD 518.3 billion, up by 0.7%. Other external investments amounted to USD 1.7801 trillion, up by 0.8%. Second, external liabilities have decreased. At the end of June 2018, China's external liabilities reached USD 5.2975 trillion, down by 2.8% from the end of March, mainly affected by exchange rate changes and value revaluation. To be specific, China's direct investment liabilities were USD 2.9507 trillion, down by 3.8%. External portfolio investment liabilities stood at USD 1.1287 trillion, down by 2.1%; while other external investment liabilities amounted to USD 1.2113 trillion, down by 1.4%. 2018-09-28/en/2018/0928/1462.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 June 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 second quarter of 2018? A: China's external debt continued to grow in the second quarter of 2018. As at the end of June 2018, China's full-scale outstanding external debt registered USD 1.8705 trillion (in both domestic and foreign currencies), up by USD 27 billion or 1.5% quarter on quarter, primarily driven by the fact that overseas non-resident institutions continued to increase holdings of domestic RMB bonds. Q: What would you say about China’s external debt situations? A: Overall, China's external debt for the second quarter was steadily rising, and its structure was further optimized. First, as the domestic bond market has been further liberalized, the demand of foreign institutional investors to allocate China's domestic RMB bonds, especially medium - and long-term treasury bonds, continues to increase. According to relevant statistics, by the end of June 2018, the proportion of foreign institutions in China's treasury bond market had reached 7.28%, up by 2.31 percentage points so far this year, reaching a record high. Second, more than 70% of China's full-scale outstanding external debt increase for the second quarter was driven by medium - and long-term external debt, and the structure of external debt has been further optimized. By the end of June 2018, the ratio of China's short-term external debt to foreign exchange reserves was 38%, far below the international warning line. Looking ahead, uncertainties and destabilizing factors in the international financial and economic environment are obviously on the rise. However, with the constant transformation of old and new drivers of growth, China's economy will maintain the fundamentals of resilience, adaptability and ample room for maneuver, which will help promote the basic equilibrium of cross-border capital flows. The SAFE will continue to pay close attention to the changes in the international and domestic situations, constantly improve the management system of external debt and capital flow under the framework of macro-prudential management, and attach equal importance to serving the real economy and preventing financial risks, so as to promote sustainable and sound economic development. 2018-09-28/en/2018/0928/1461.html
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Q: The latest data released by the People's Bank of China on foreign exchange reserves show that China's foreign exchange reserves as at the end of July 2018 rose by USD 5.8 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 July 2018, China's foreign exchange reserves stood at USD 3,117.9 billion, up by USD 5.8 billion or 0.19% month on month. In July, China's cross-border capital flow was generally stable and the foreign exchange market maintained a basic equilibrium in supply and demand. Under the combined impact of the basically unchanged US dollar index, the slightly fluctuated price of financial assets, the exchange rate translation of major non-USD currencies and the asset price changes in global financial markets, China’s foreign exchange reserves steadily increased. Since the beginning of this year, the global financial markets have become increasingly volatile, witnessing the rising of both the exchange rate and interest rate of US dollar. Some emerging economies have been hit hard, global trade frictions have intensified, and the complexity and uncertainty of the external environment have both increased remarkably. Against this backdrop, China's economy remained stable and gained momentum for growth. Preliminary results have been achieved in guarding against and mitigating financial risks, with the economic structure continuously optimized, the foreign exchange market operating stable in general, and the flexibility of RMB exchange rate remarkably strengthened. Looking ahead, the international economic and financial environments will be complex and tough, global trade protectionism will continue aggravating, the macroeconomic policies of major countries will be diverging and the international financial market fluctuations will increase. However, China's economic and policy fundamentals are expected to still remain robust and cross-border capital flow and foreign exchange market operation will be able to maintain overall stability. Under such factors at home and abroad, China's foreign exchange reserves are expected to remain stable in fluctuation. 2018-08-07/en/2018/0807/1471.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 at the end of September 2018 dropped by USD 22.7 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 September 2018, China's foreign exchange reserves recorded USD 3.087 trillion, down by USD 22.7 billion or 0.7% month on month. In September, China's foreign exchange market performed stably and the foreign-related transactions of market participants are rational and orderly. On the global financial markets, the US Dollar Index basically remained unchanged from the end of August, because the exchange rate of major non-USD currencies witnessed both rising and falling and the prices of major national bonds fell slightly. Due to the combined impact of exchange rate translation and asset price changes, China’s foreign exchange reserves fell slightly. In the year to date, in the face of complex external environment, China adhered to the general work guidelines of making progress while maintaining stability, and deepened reform and opening up. As a result, the economy maintained overall stability and gained momentum for growth, the economic structure was constantly optimized, the two-way fluctuation resilience of RMB exchange rate was continuously strengthened, the balance of payments maintained basic equilibrium, and China’s foreign exchange reserves remained stable. Looking ahead, although the external environment still contains great uncertainty, China's economy has a strong capability of adapting to and resisting external risks, and the sound fundamentals will continue to provide a solid foundation for the smooth operation of the foreign exchange market. Under such factors at home and abroad, China's foreign exchange reserves are expected to stay stable amid fluctuations. 2018-10-07/en/2018/1007/1469.html
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Q: The latest data released by the People's Bank of China on foreign exchange reserves show that China's foreign exchange reserves as at the end of August decreased by USD 8.2 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 August 2018, China's foreign exchange reserves stood at USD 3,109.7 billion, down by USD 8.2 billion or 0.26% month on month. In August, the supply and demand of China's foreign exchange market remained stable and the cross-border capital flows maintained a basic equilibrium. Global trade frictions, geopolitical economic situations and other uncertainties continued to intensify, and the US dollar index rose in fluctuation. As a result, China's foreign exchange reserves declined slightly. Since the beginning of this year, there has been a remarkable increase in international political and economic risk factors, some emerging market economies have suffered from heavy shocks and the international financial market volatility has increased. However, China's foreign exchange reserves remained basic stability, mainly because China's economy maintained stability while ensuring progress and gained momentum for growth, the foreign exchange market operated smoothly and the flexibility of RMB exchange rate was further enhanced. Looking ahead, in spite of the complex international environment and rising uncertainties on financial markets, China's economy is expected to maintain the fundamentals of good resilience, strong adaptability and much leeway to improve. In the meanwhile, firmly adhering to the goal of reform and opening-up will be conducive to maintaining the adaptive equilibrium of the balance of payments. Under such factors at home and abroad, China's foreign exchange reserves are expected to remain stable in fluctuation. 2018-09-07/en/2018/1129/1472.html
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The State Administration of Foreign Exchange (SAFE) has recently released the preliminary data in the Balance of Payments for the second quarter and the first half of 2018. Its press spokesperson has answered media questions on relevant issues. Q: Could you brief us on the new characteristics of the balance of payments for the second quarter of 2018, relative to the first quarter? A: The preliminary data in the Balance of Payments for the second quarter show that China's BOP maintained a basic equilibrium and reserve assets rose. Below are the new characteristics: First, the current account was in surplus, with a higher surplus under trade in goods, and a stable deficit under trade in services. In the second quarter, the current account recorded a surplus of USD 5.8 billion, including a surplus of USD 104.2 billion under trade in goods, and a deficit of USD 73.7 billion under trade in services in the Balance of Payments. Transportation, travel and intellectual property fees remained in deficit. Second, the financial account excluding reserve assets continued to be in surplus, featuring net cross-border capital inflows. In the second quarter, the financial account excluding reserve assets registered a surplus of USD 18.2 billion, and cross-border capital continued with net inflows that started from the first quarter of 2017. Third, FDI stayed high. In the second quarter, China posted USD 29.9 billion in net inflows of direct investment. ODI recorded net outflows of USD 28.7 billion, and FDI registered net inflows of USD 58.6 billion, which was high. Fourth, reserve assets increased slightly. In the second quarter, China's reserve assets rose by USD 23.9 billion due to BOP transactions (excluding non-transaction factors like foreign exchange rate and price). Specifically, foreign exchange reserves went up by USD 22.9 billion. Overall, China's balance of payments maintained a basic equilibrium in the second quarter. It is noteworthy that the receipts and payments under the current account have entered an equilibrium range in recent years, with a slight surplus or deficit counted as a basic equilibrium. Going forward, the balance of the current account is expected to stay within a reasonable range, and the BOP will continue with an overall equilibrium. 2018-08-06/en/2018/0806/1449.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated the preliminary data on the balance of payments for the third quarter and the first three quarters of 2018. The SAFE spokesperson Wang Chunying answered media questions on relevant issues. Q: Could you brief us on the new characteristics of the balance of payments for the third quarter of 2018, relative to the second quarter? A: The preliminary data on the balance of payments for the third quarter show surplus under the current account and deficit under the financial account (excluding reserve assets, but including net error and omission for the same quarter, the same as below). The main characteristics are as follows: Firstly, the surplus under the current account continued to pick up. In the third quarter, the surplus under the current account stood at USD 16 billion, up by 200% from the second quarter. Specifically, the surplus of trade in goods and services was USD 18.6 billion, among which, the surplus of trade in goods in the BOP was USD 100.8 billion and the deficit of trade in services USD 82.2 billion. Primary income was changed from deficit of USD 20.7 billion in the second quarter to surplus of USD 1.1 billion, which is mainly attributed to the rapid increase in income of various outbound investments in the third quarter. The secondary income posts a deficit of USD 3.7 billion, representing a slight decline. Secondly, the financial account (excluding reserve assets) showed a deficit. In the third quarter of 2018, the financial account (excluding reserve assets) registered a deficit of USD 18.8 billion. Specifically, direct investment recorded a net inflow of USD 1.3 billion, among which, ODI registered a net outflow of USD 23 billion, and FDI recorded a net inflow of USD 24.3 billion. Besides, based on incomplete statistics,portfolio investments in the third quarter showed a net inflow of nearly USD 50 billion, while other investment such as deposit and loan registered a net outflow of roughly USD 10 billion. Thirdly, reserve assets fell slightly. In the third quarter of 2018, China's reserve assets decreased by USD 3 billion due to the BOP transactions (excluding the impact of non-transaction factors such as exchange rate and price), among which, foreign exchange reserves decreased by USD 3.1 billion. Overall, China's balance of payments continued to maintain the equilibrium in the third quarter of 2018. Since China's economic operation has maintained stability while ensuring progress, the transformation and upgrade has been further promoted and quality and efficiency has been steadily improved, China's current account balance will remain within a reasonable range in the future, and the cross-border capital will maintain bi-directional flow and overall equilibrium. 2018-11-05/en/2018/1105/1470.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 December 2017, and an official from the SAFE answered media questions on relevant issues regarding China's external debt. Q: Could you brief us on the overall changes in external debt for 2017? How to evaluate the external debt risks facing China now? A: China's external debt was on the rise in 2017. As at the end of December, the full-scale outstanding external debt (including domestic and foreign currencies) hit USD 1.7106 trillion, up by USD 294.8 billion year on year. In terms of quarters, external debt rose fastest in the second and third quarters, amounting to USD 124.9 billion and USD 117.2 billion respectively; the outstanding external debt climbed by USD 35.5 billion in the fourth quarter, which was very low. As for debt vehicles, the growth in external debt in China was primarily driven by the increases in currencies & deposits, and debt bonds, with their contribution to the overall expansion of external debt reaching 42% and 37% respectively. The external debt risks facing China are within control now. As at the end of 2017, the liability ratio, or the ratio of outstanding external debt to GDP was 14%; the debt ratio, or the ratio of outstanding external debt to export income from trade in goods and services was 71%; the debt servicing ratio, or the ratio of payments of principal and interest on external debt in the middle and long term and payments of interest on external debt in the short term to export income from trade in goods and services, was 7%, and the ratio of short-term external debt to foreign exchange reserves was 35%. All of the above indicators are below the internationally accepted safe levels. Q: What are the drivers of the growth in China's outstanding external debt? A: In 2017, the growth in China's outstanding external debt was primarily driven by the stable macro economic performance and the yielding of policy dividends. On the one hand, China witnessed stable economic development with strong momentum for growth and steady increase in economic development indicators. China's GDP for 2017 hit RMB 82.7 trillion, up by 6.9% year on year; imports and exports totaled RMB 27.8 trillion, up by 14.2% year on year; the two-way fluctuations of RMB exchange rate were more resilient, with RMB exchange rate expected to stay stable. All of these are the basic drivers of the growth in China's external debt. On the other hand, a wealth of reformative measures were introduced, enhancing the facilitation of cross-border financing by domestic players. In the year, the People's Bank of China (PBC) and the SAFE stepped up their efforts to improve the macro-prudential administration policy for full-scale cross-border financing, actively supporting financial institutions and enterprises to carry out cross-border financing in domestic and foreign currencies on their own and enabling domestic institutions to expand financing channels and reducing financing costs by making full use of the two markets and two types of resources. Moreover, the inter-bank bond market was more liberalized. In particular, the Bond Connect between the mainland and Hong Kong opened the domestic financial market wider to foreign investors, arousing foreign institutions' interest in holding more domestic bonds, and as a result, the domestic bonds they hold kept rising. Going forward, the PBC and SAFE will implement the requirement of improving the framework of regulation underpinned by monetary policy and macro-prudential policy, which was proposed at the 19th CPC National Congress. They will improve the macro-prudential administration policy with focus on bank and short-term capital flows, and make full use of its roles in counter-cyclical adjustment. While effectively preventing risks, they will step up efforts to serve the real economy and promote sustainable and healthy economic development. 2018-03-29/en/2018/0329/1422.html
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The State Administration of Foreign Exchange (SAFE) has recently published the Balance of Payments and the International Investment Position for the third quarter and the first three quarters of 2017, and its press spokesperson answered media questions regarding relevant issues. Q: Could you brief us on China's balance of payments for the first three quarters of 2017? A: China witnessed twin surplus under the current account and the financial account in the Balance of Payments (excluding reserve assets) and increased reserve assets for the first three quarters of 2017. A surplus was registered under the current account. In the first three quarters, a surplus of USD 109.8 billion was recorded under the current account, contributing 1.3% to China's GDP, which remained reasonable. To be specific, a surplus of USD 334.7 billion was registered in trade in goods in the Balance of Payments, with exports of USD 1.5953 trillion and imports of USD 1.2605 trillion, which increased by 10% and 17% year on year respectively, indicating stronger momentum for the recovery foreign trade. A surplus was registered under the financial account that excludes reserve assets. A surplus of USD 112.1 billion was registered under the financial account that excludes reserve assets in the first three quarters of 2017, compared with a deficit of USD 313.9 billion for the same period the previous year. On the one hand, outbound investments remained steady. China posted a net increase of USD 213 billion in external financial assets due to the balance of payments transactions in the first three quarters. Specifically, net ODI went up by USD 65.1 billion; net external securities investment rose by USD 64.1 billion; and other investments such as external deposits and loans increased by USD 85.8 billion net. On the other hand, overseas investors continued to increase investments in China. In the first three quarters, the net external liabilities grew by USD 325.1 billion. To be specific, FDI climbed by USD 87.9 billion net; securities investment in China rose by USD 82.1 billion net; and other investments such as non-resident deposits attracted and loans obtained jumped by USD 155.9 billion net. An increase was recorded in reserve assets. In the first three quarters, China's reserve assets rose by USD 58.9 billion due to the balance of payments transactions (excluding non-trading factors such as exchange rate and price), compared with a decrease of USD 294.1 billion the same period of the previous year. In particular, foreign exchange reserves went up by USD 59.8 billion and reserve position in the IMF went down by USD 900 million. As the sustained recovery of the global economy helps strengthen the external demand, China's economy is operated within a reasonable range and the financial market is further opened up, China's balance of payments is expected to continue the basic equilibrium going forward. Q: What would you say about China's International Investment Position as at the end of September 2017? A: As at the end of September, China witnessed increased external financial assets and liabilities against the end of the previous year. China posted USD 1.7064 trillion in net external assets as at the end of September, including USD 6.7928 trillion in external assets, USD 5.0864 trillion in external liabilities, which went up by 5.0% and 9.0% respectively against the end of the previous year (same below). External assets were on an upward trend. To be specific, ODI rose by USD 75.9 billion or 5.8%; securities investment grew by USD 88.7 billion or 24.3%; financial derivative instruments went up by USD 1.5 billion or 28.8%; other investments increased by USD 53.6 billion or 3.2%; and reserve assets climbed by USD 106.5 billion or 3.4%. External liabilities continued to recover. Specifically, FDI grew by USD 87.4 billion or 3.0%; securities investment rose by USD 162.1 billion or 20.0%; financial derivative instruments went down by USD 1.8 billion or 26.8%; and other investments rose by USD 172.7 billion or 17.5%. In terms of the composition of external assets, reserve assets was USD 3.2044 trillion, 47% of total assets; ODI was USD 1.3931 trillion, 21% of total assets; securities investment was USD 453.8 billion, 7% of total assets; financial derivative instruments was USD 6.7 billion, 0.1% of total assets; and other investments hit USD 1.7347 trillion, 26% of total assets. With regard to the composition of external liabilities, FDI was USD 2.9533 trillion, 58% of total liabilities, the highest among external liabilities; securities investment was USD 970.7 billion, 19% of total liabilities; financial derivative instruments was USD 4.8 billion, 0.1% of total liabilities; and other investments reached USD 1.1576 trillion, 23% of total liabilities. Overall, China sustained its No. 1 position worldwide by reserve assets. With orderly outbound investments and rising inbound investments, China's international investment position is robust. 2017-12-28/en/2017/1228/1388.html