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According to the statistics of the State Administrationof Foreign Exchange (SAFE), the Chinese foreign exchange market (excluding foreign currency pairs, the same below) recorded total transactions of RMB 23.42 trillion (equivalent to USD 3.36 trillion) in September 2022. In terms of markets, the transactions volume of client market was RMB 3.67 trillion (equivalent to USD 0.53 trillion), and the transactions volume of interbank market was RMB 19.75 trillion (equivalent to USD 2.84 trillion). In terms of products, the cumulative transactions volume of the spot market was RMB 8.45 trillion (equivalent to USD 1.21 trillion), and that of the derivatives market was RMB 14.97 trillion (equivalent to USD 2.15 trillion). From January to September 2022, a total of RMB 180.27 trillion (equivalent to USD 27.29 trillion) was traded in the Chinese foreign exchange market. 2022-10-28/en/2022/1028/2010.html
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Distinguished Party Secretary Chen, Mayor Gong, President Rousseff, and dear guests, Good morning! The topic of my speech today is “Global Financial Cycle: Trends and Implications”. Since the 1990s, the financial indicators such as asset prices, credit growth, bank leverage ratio, and cross-border capital flows have resonated with each other across the world, especially in some developed economies such as the United States and Europe. Over the medium and long term, financial activities witness obvious periodic fluctuations. Since the 1990s, financial markets have experienced three major downturns, namely the dot-com bubble burst in 2000-2002, the global financial crisis in 2008-2009, and the plunge in the global stock, bond and foreign exchange markets in 2022. The financial indicators such as stocks, bonds, and exchange rates together constitute a Financial Conditions Index (FCI) that reflects the overall financial situation, and such an index has undergone rapid and sharp tightening during these three downturns. Because of the dollar’s dominance in the international monetary system, the Federal Reserve (Fed)’s monetary policy has become an important driver of the global financial cycle. The Fed’s three rounds of interest rate hikes respectively in 1999-2000, 2004-2006, and 2022 have led to the three downturns in the global financial cycle. In 2022, the global stock, bond and foreign exchange markets suffered heavily. The global stock market fell by about 20 percent for the whole year, bonds also saw a double-digit decline, cross-border capital flows dropped sharply, and bank credit standards were generally tightened. These are all typical characteristics of a downturn in the global financial cycle. In 2022, the FCI of the United States rose from an extremely low level in history, and the tightening regarding degree and speed was second only to that of the global financial crisis in 2008. The reason for this is Fed’s monetary policy, which experienced drastic tightening after drastic easing. Whenever financial conditions in the United States are tightened, some emerging economies with relatively fragile economic fundamentals and high dependence on external financing will face massive capital outflows, currency depreciation, external debt repayment pressures, and even a financial crisis. Since 2022, with the rapid tightening of financial conditions in the United States, the global financial cycle has moved into a downward phase, and emerging economies have once again faced pressures such as the depreciation of their currencies. From May 2021 to September 2022, the US dollar index rose from 89 to 114, an increase of 28 percent, on a par with the rise from mid-2014 to early 2017. During the same period, the JP Morgan Emerging Markets Currency Index declined 17 percent, a significantly smaller drop than the 29 percent decline between mid-2014 and early 2017. This round of currency depreciation in emerging economies is relatively small, and there are three main reasons. First, the foreign exchange reserves of emerging economies have continued to grow, offering a thicker buffer against capital outflows. Second, many central banks of emerging economies have won the initiative by starting their interest rate hiking cycles ahead of the Fed. Third, commodity-exporting emerging economies have been lifted by the rising global commodity prices. Although the current downturn in the financial cycle has a weaker impact on emerging economies than the previous ones, some emerging economies with weak economic strength and high dependence on external financing are still under great pressure to repay their debts. In recent years, China’s financial cycle has remained relatively stable. Since 2020, the yield on 10-year government bonds has fluctuated within a narrow range between 2.4 percent and 3.4 percent. The difference between the highest and lowest points is less than 100 basis points, which is significantly smaller than the nearly 400 basis points in the United States during the same period. Besides, the aggregate financing to the real economy (AFRE) in China has maintained a growth rate of around 10 percent. The reason behind the relative stability of China’s financial cycle is that the country has maintained a sound monetary policy for a long term. China’s monetary policy focuses on domestic conditions while balancing internal and external equilibria with proper intertemporal adjustments. Instead of following the Fed’s policy, we avoid great volatility in releasing or draining liquidity, and do not advocate competitive zero interest rates or quantitative easing. China’s stable financial cycle creates a suitable environment for its economic performance and financial market operation. The market liquidity remains adequate at a reasonable level, providing sufficient and stable financing for the real economy. Credit impulse is an important indicator to reflect changes in the financial cycle, including the direction of marginal changes in the cycle. Measured by the marginal change in the ratio of newly added credit to gross domestic product (GDP), China’s credit impulse has turned positive and upward since 2023, indicating that the credit is playing an increasingly important role in supporting the economy. Since the beginning of 2023, the forecasts for China’s economic growth have been revised upward in general. The International Monetary Fund (IMF) revised its forecast for China’s economic growth this year from 4.4 percent to 5.2 percent. And just two days ago, the World Bank raised its forecast from 4.3 percent to 5.6 percent. The competitive real interest rate of RMB assets is conducive to the value preservation of the RMB held by China’s trade and investment partners. Measured by the difference between the yield on 2-year government bonds and the core consumer price index (CPI), China’s real interest rate is around 1.7 percent, which is similar to that in the United States after a sharp hike, and is significantly higher than that of developed economies such as Germany and Japan. Amidst the worldwide elevated inflation, the value of RMB bonds as a portfolio diversifier is highlighted. Since 2022, both the government bonds and equities have experienced an obvious decline in developed countries, representing a shift from negative correlation to positive, so the benefits of bonds as a portfolio diversifier for equities have decreased sharply. As for emerging markets, their bonds are always highly correlated with global equities, as they are risky assets. In contrast, Chinese bonds maintains a negative correlation with the global equities, hence a better diversifier. Since 2023, our foreign exchange market has been generally stable. Cross-border capital flows have maintained a basic equilibrium, compared with a relatively high surplus at the beginning of the year. Foreign exchange reserves have witnessed steady growth, and the RMB exchange rate has remained basically stable at an adaptive and equilibrium level. Since mid-April, affected by various internal and external factors, especially the strengthening of the US dollar index due to the US debt ceiling issue, the rising risk aversion driven by small and medium-sized bank risks, and the heightened expectations for Fed rate hikes, and considering that the foundation for the economic recovery in China is not yet solid, the RMB exchange rate has experienced some fluctuations. However, our foreign exchange market has remained stable overall, and the market expectations on the exchange rate and the cross-border capital flows have also remained relatively stable. Looking forward, China’s economy will generally maintain a steady and upward trend, while some market institutions are predicting that the US economy may face a mild recession. At the same time, as the Fed’s rate hike cycle draws to a close, it will be difficult for the US dollar to continue going strong, and its spillover effect is expected to be weaker. Overall, China’s foreign exchange market is expected to remain stable. After years of reform and development, China’s foreign exchange market has taken on new features in recent years: the market has become more resilient, as the market players are more mature and their trading behaviors are more rational. The exchange rate risk hedging instruments have been widely used, and the large increase in the cross-border use of RMB has also greatly reduced China’s exchange rate risk exposure. Meanwhile, the regulators of China’s foreign exchange market have become more composed, mature, and experienced in dealing with market changes. Over the years, we have accumulated a great deal of experience in coping with external shocks, and the macro-prudential policy instruments in our foreign exchange market have also become more abundant. Therefore, we are confident, prepared and capable of maintaining the stability of China’s foreign exchange market. Finally, I wish this year’s Lujiazui Forum a complete success. Thank you! 2023-06-08/en/2023/0608/2094.html
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As shown in the statistics of the State Administration of Foreign Exchange (SAFE), in June 2023, the amount of foreign exchange settlement and sales by banks was RMB 1431.6 billion and RMB 1372.7 billion, respectively. During January to June 2023, the accumulative amount of foreign exchange settlement and sales by banks was RMB 7848.2 billion and RMB 7833.8 billion, respectively. In the US dollar terms, in June 2023, the amount of foreign exchange settlement and sales by banks was USD 200.3 billion and USD 192.0 billion, respectively. During January to June 2023, the accumulative amount of foreign exchange settlement and sales by banks was USD 1132.5 billion and USD 1130.7 billion, respectively. In June 2023, the amount of cross-border receipts and payments by non-banking sectors was RMB 3863.5 billion and RMB 3777.9 billion, respectively. During January to June 2023, the accumulative amount of cross-border receipts and payments by non-banking sectors was RMB 20974.6 billion and RMB 20652.6 billion, respectively. In the US dollar terms, in June 2023, the amount of cross-border receipts and payments by non-banking sectors was USD 540.4 billion and USD 528.4 billion, respectively. During January to June 2023, the accumulative amount of cross-border receipts and payments by non-banking sectors was USD 3025.9 billion and USD 2979.2 billion, respectively. Addendum: Glossary and relevant definitions Balance of payments (BOP) refers to all economic transactions between residents and non-residents. Foreign exchange settlement and sales by banks refers to settlement and sale transaction that bank executes for customers and for the banks themselves, including statistic data on settlements of forward contracts for foreign exchange settlement and sales and the exercises of option, and excluding the transactions in the interbank foreign exchange market. The statistic reporting date of Foreign exchange settlement and sales by banks should be the trade day of the Foreign exchange settlement and sales transaction. By definition, foreign exchange settlement means that foreign exchange holders sell foreign exchange to banks, and foreign exchange sales means that banks sell foreign exchange to foreign exchange buyers. The newly signed contract amount of forward foreign exchange settlement and sales refers to the binding forward contract between a bank and its client that predetermines foreign exchange currency, amount, exchange rate and tenor which to be executed upon maturity. The unwind amount of forward foreign exchange settlement and sales refers to, where client is unable to perform the original forward contract due to change in its real demand, client to fully or partially close its forward position by executing another deal with opposite direction to the original contract. The rolling amount of forward foreign exchange settlement and sales refers to client to adjust the settlement date of original contract due to change in its real demand. The outstanding amount of forward foreign exchange settlement and sales by the end of the current period refers to the total amount of forward contracts accumulated from all non-matured forward contracts with client. The net Delta exposure of outstanding options refers to the implied foreign exchange spot risk exposure from outstanding option contracts that bank executed with client. The cross-border receipts and payments by non-banking sectors refers to the receipts and payments between domestic non-banking sectors (including institutional and individual residents) and non-residents through domestic banks, excluding receipts and payments in cash. In particular, the statistics includes cross-border receipts and payments between non-banking sectors and non-residents through domestic banks (including RMB and foreign currency), and domestic receipts and payments between non-banking sectors and non-residents through domestic banks (temporarily excluding domestic receipts and payments in RMB between individual residents and non-resident individuals). Data are collected when customers conduct receipts and payments with non-resident counterparties at domestic banks. Specifically, the receipts refer to the capital of non-banking sectors received from non-residents via domestic banks; the payments refer to the capital of non-banking sectors paid to non-residents via domestic banks. 2023-07-21/en/2023/0721/2101.html
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The State Administration of Foreign Exchange (SAFE) recently released the Balance of Payments (BOP) for the first quarter of 2023 as well as the International Investment Position (IIP) at the end of March 2023. The SAFE deputy administrator and press spokesperson, Wang Chunying, answered media questions on relevant issues. Q: Could you brief us on China's BOP for the first quarter of 2023? A: In the first quarter of 2023, China's balance of payments maintained a general equilibrium. The current account surplus reached the highest record for the same period in history and stood at USD 81.5 billion, with its ratio to Gross Domestic Product (GDP) reaching 2.0%, which remains within a reasonable and balanced range. Firstly, the trade surplus in goods and the scale of exports and imports all reached the second-highest levels in history for the same period. In the first quarter of 2023, China's national economy continued to recover, with a good start in economic performance. Trade in goods on a BOP basis posted a surplus of USD 129.9 billion, with exports of USD 739.2 billion and imports of USD 609.2 billion. All three figures are the second-highest in history during the same period of time. Secondly, the trade deficit in services, such as traveling and transportation, expanded. In the first quarter, the trade deficit in services registered USD 47.2 billion. More specifically, the travel deficit was USD 43.4 billion, an increase of 58% year-on-year, mainly due to residents' gradual recovery of outbound travel, which drove up travel spending. The transportation deficit was USD 19.1 billion, compared to a surplus of USD 3.3 billion in the same period last year, mainly due to the orderly recovery of global transport capacity and the gradual return of China's transportation services to pre-pandemic levels. Thirdly, the two-way cross-border investment remained stable. In the first quarter, China's outward investment was stable and orderly. The net increase in the financial account's assets was USD 99.8 billion, of which the reserve assets increased by USD 25.5 billion due to net transactions, and non-reserve financial account assets increased by USD 74.4 billion. The net increase in financial account liabilities was USD 23.5 billion, and foreign investment in China exhibited a net inflow. Overall, China adheres to the general principle of pursuing progress while ensuring stability in its work, and the economy's overall performance has rebounded and improved, which is conducive to maintaining a basic balance in international payments. Q: What can you say about China's IIP at the end of March 2023? A: By the end of March 2023, China's IIP remains robust, increasing both foreign financial assets and liabilities. China's reserve assets continue to rank first in the world in terms of size. Firstly, China's net external assets have increased in size. As of the end of March 2023, China's foreign assets amounted to USD 9445.7 billion, an increase of 2.0% from the end of 2022. Foreign liabilities amounted to USD 6880.4 billion, an increase of 2.3%. China's net external assets (assets minus liabilities) amounted to USD 2565.3 billion, an increase of 1.3% while maintaining continuous growth since the end of March 2022. Secondly, the structure of China's external financial assets and external liabilities remained sound. In the catalogue of China's external financial assets, China's reserve assets exceeded USD 3.4 trillion, ranking first globally. Over half of the foreign liabilities are direct investments in China, totaling USD 3.5 trillion, an increase of 1.2% from the end of 2022. 2023-06-30/en/2023/0630/2098.html
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The State Administration of Foreign Exchange (SAFE) has recently released the data on foreign exchange settlement and sales by banks as well as cross-border receipts and payments by non-banking sectors in May 2023. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on China's foreign exchange receipts and payments of May 2023. Q: Could you brief us on China's foreign exchange receipts and payments in May 2023? A: The supply and demand of the foreign exchange market remained generally balanced. In May, the surpluses registered by foreign exchange settlement and sales by banks and cross-border receipts and payments by non-banking sectors (including enterprises and individuals) were USD 3.3 billion and USD 1.9 billion, respectively. Considering other supply and demand factors, China's foreign exchange market's overall supply and demand remained balanced. Market expectations remained stable, and transactions in China's foreign exchange market were conducted rationally and orderly. In May, the foreign exchange settlement rate (the ratio of foreign exchange sold by customers to banks to foreign exchange received by customers) reached 72%, roughly the same as the previous month. It reflects that the willingness of market entities to settle foreign exchange remained at a near one-year high, with an overall trend of engaging in rational trading by selling foreign exchange at high levels. Meanwhile, the foreign exchange sales rate (the ratio of foreign exchange purchased by customers from banks to foreign-related foreign exchange payments made by customers) reached 70.4%, down 0.7 percentage points compared to the previous month, indicating that the willingness of market entities to purchase foreign exchange remained generally stable. Cross-border capital flows through major channels were conducted rationally and orderly. Under the current account, the surplus registered by trade in goods in foreign-related receipts and payments increased by 23% compared to the previous month, contributing to the stabilization of cross-border capital flows. However, due to the slow recovery of cross-border travel by residents, there was an increase in the deficit in service trade in terms of foreign-related receipts and payments. Under the capital account, China continued to see a net inflow of foreign direct investment, while the domestic bond market attracted more foreign investment, indicating further improvement. Additionally, domestic entities' outbound direct investment and portfolio investment activities continued to be consistent and well-organized. Looking ahead, it is anticipated that China's economy will continue to grow with the help of well-coordinated macro policies, further strengthening its position in the foreign exchange market. The US dollar is unlikely to continue to rise as major developed economies finish their cycle of tightening monetary policy, and any associated spillover effects will progressively fade. Additionally, China's foreign exchange market has proven to be more resilient and better able to adapt to changes in the outside environment, resulting in stable and well-managed cross-border capital flows in China. 2023-06-15/en/2023/0615/2095.html
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The State Administration of Foreign Exchange (SAFE) recently released data on external debt at the end of March 2023. SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on relevant issues. Q: Could you brief us on China's external debt in the first quarter of 2023? A: In the first quarter of 2023, China's external debt has rebounded slightly, with the structure remaining largely stable. By the end of March 2023, the total outstanding external debt (including domestic and foreign currencies) reached USD 2.4909 trillion, representing an increase of USD 38.1 billion or 2% from the end of 2022. Regarding currency structures, external debt in domestic currency accounted for 45% of China's total external debt, basically the same as at the end of 2022. Concerning the maturity structure, medium-and-long-term external debt accounted for 44%, down by one percentage point from the end of 2022. Q: What is your comment on China's external debt situation? A: China's economy has had a promising start, and the scale of its foreign debt has slightly increased. In the first quarter of 2023, China's economy got off to a good start, with social production and financing demand stabilizing and rebounding. Driven by the growth of bank currency and deposit balances, the scale of China's external debt has increased slightly. China's external debt is projected to stay stable in the future. As major developed economies slow down their monetary policy-tightening pace, the spillover effects are expected to weaken gradually. Meanwhile, China adheres to the general principle of pursuing progress while ensuring stability, and the overall improvement of its economic performance provides fundamental support for the stability of its external debt scale. SAFE will continue to promote the facilitation of cross-border investment and financing to serve the high-quality development of the real economy. 2023-06-30/en/2023/0630/2097.html
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On July 13, 2023, Mr. Pan Gongsheng, Secretary of CPC PBOC Committee and SAFE Administrator, met with Paul Chan Mo-po, Financial Secretary of the HKSAR. They exchanged views on economic and financial issues of common concern. Xuan Changneng, Deputy Governor of the PBOC, was also present at the meeting. 2023-07-13/en/2023/0713/2100.html
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On July 3, 2023, Pan Gongsheng, Secretary of CPC Committee at PBoC and SAFE Administrator, met with Mr. Rhee Chang Yong, the Governor of Bank of Korea. They exchanged views on issues of macroeconomic developments and financial cooperation between China and Korea. 2023-07-03/en/2023/0703/2093.html
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On July 5, 2023, Mr. Pan Gongsheng, Secretary of CPC PBC Committee and SAFE Administrator, met with Austrian National Bank Governor Robert Holzmann. They exchanged views on economic and financial issues of common interest. 2023-07-05/en/2023/0705/2096.html
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On July 7, 2023, Mr. Pan Gongsheng, Head of the PBOC, met with Secretary Janet L. Yellen of the U.S. Treasury. They exchanged views on economic and financial issues of mutual interest. Xuan Changneng, Deputy Governor of the PBOC, participated in the meeting. 2023-07-08/en/2023/0713/2099.html