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In Q3 of 2010 the current account and the capital and financial account continued to post a "twin surplus" and international reserves maintained a growing momentum. The surplus under the current account totaled USD102.3 billion, a year-on-year increase of 103 percent as calculated on a comparable basis (the same below). Specifically, according to the statistical coverage of the balance of payments, the surpluses in goods, income, and current transfers reached USD81.4 billion, USD14 billion, and USD10.8 billion, respectively, whereas the deficit in trade in services amounted to USD3.9 billion. Meanwhile, China's surplus under the capital and financial account totaled USD15.2 billion, a decrease of 65 percent year on year. In particular, the net inflows of direct investments and portfolio investments amounted to USD24.6 billion and USD14.1 billion respectively, whereas the net outflows of other investments reached USD24.5 billion. International reserves assets posted an increase of USD108 billion, a rise of 31 percent. Specifically, transactions in foreign exchange reserves assets registered an increase of USD107.3 billion (exclusive of the influence of changes in the value of non-transaction factors, such as exchange rates and prices) and the reserve position in the IMF registered an increase of USD700 million. In the first three quarters of 2010, China's surplus under the current account totaled USD203.9 billion, an increase of 30 percent year on year; China's surplus under the capital and financial account totaled USD130.1 billion, an increase of 2 percent; and international reserves assets posted an increase of USD286 billion, an increase of 7 percent. Chinas Balance of Payments Statement Q3 of 2010 Unit: USD100 million Items # Balance Credit Debit I. Current Account 1 1,023 5,315 4,292 A. Goods and Services 2 776 4,759 3,983 a. Goods 3 814 4,307 3,493 b. Services 4 -39 452 491 1.Transportation 5 -73 96 169 2.Travel 6 -16 118 134 3.Communication Services 7 0 3 3 4.Construction Services 8 24 38 14 5.Insurance Services 9 -36 6 42 6.Financial Services 10 -2 4 5 7.Computer and Information Services 11 18 25 7 8.Royalties and Licensing Fees 12 -29 2 30 9.Consulting Services 13 20 57 38 10.Advertising and Public Opinion Polling 14 2 7 5 11.Audio-visual and Related Services 15 0 0 1 12. Other Business Services 16 54 95 41 13. Government Services, n.i.e. 17 0 2 2 B. Income 18 140 433 293 1.Compensation of Employees 19 33 37 4 2.Investment Income 20 107 396 289 C. Current Transfers 21 108 123 15 1.General Government 22 -1 0 1 2.Other Sectors 23 108 123 14 II. Capital and Financial Account 24 152 2,717 2,565 A. Capital Account 25 9 9 0 B. Financial Account 26 143 2,708 2,565 1. Direct Investment 27 246 501 254 1.1 Abroad 28 -181 22 203 1.2 In China 29 427 478 51 2. Portfolio Investment 30 141 201 59 2.1 Assets 31 -6 36 41 2.1.1 Equity Securities 32 -3 25 28 2.1.2 Debt Securities 33 -3 10 13 2.1.2.1 Bonds and Notes 34 -3 10 13 2.1.2.2 Money Market Instruments 35 0 0 0 2.2 Liabilities 36 147 165 18 2.2.1 Equity Securities 37 154 158 3 2.2.2 Debt Securities 38 -7 7 15 2.2.2.1 Bonds and Notes 39 -7 7 15 2.2.2.2 Money Market Instruments 40 0 0 0 3. Other Investment 41 -245 2,006 2,251 3.1 Assets 42 -694 64 758 3.1.1 Trade Credits 43 -182 0 182 Long-term 44 -13 0 13 Short-term 45 -169 0 169 3.1.2 Loans 46 -259 1 260 Long-term 47 -138 0 138 Short-term 48 -122 1 122 3.1.3 Currency and Deposits 49 -270 46 316 3.1.4 Other Assets 50 17 17 0 Long-term 51 0 0 0 Short-term 52 17 17 0 3.2 Liabilities 53 449 1,942 1,493 3.2.1 Trade Credits 54 133 133 0 Long-term 55 9 9 0 Short-term 56 124 124 0 3.2.2 Loans 57 140 1,500 1,360 Long-term 58 20 50 31 Short-term 59 121 1,450 1,329 3.2.3 Currency and Deposits 60 177 303 127 3.2.4 Other Liabilities 61 -1 6 7 Long-term 62 -1 0 1 Short-term 63 0 6 6 III. Reserves Assets 64 -1,080 0 1,080 3.1 Monetary Gold 65 0 0 0 3.2 Special Drawing Rights 66 0 0 0 3.3 Reserves Position in the Fund 67 -7 0 7 3.4 Foreign Exchange 68 -1,073 0 1,073 3.5 Other Claims 69 0 0 0 c. Net Errors and Omissions 70 -94 0 94 Note: 1. This statement employs rounded-off numbers. 2. As of the third quarter of 2010, in accordance with international standards, the undistributed profits and the profits that have been distributed but not remitted shall be recorded in the Balance of Payments statement. Chinas Balance of Payments Statement For the First three Quarters of 2010 Unit: USD100 million Items # Balance Credit Debit I. Current Account 1 2,039 13,983 11,944 A. Goods and Services 2 1,555 12,597 11,042 a. Goods 3 1,711 11,370 9,659 b. Services 4 -156 1,227 1,383 1.Transportation 5 -214 247 461 2.Travel 6 -42 337 379 3.Communication Services 7 0 8 8 4.Construction Services 8 61 100 38 5.Insurance Services 9 -101 13 114 6.Financial Services 10 1 8 7 7.Computer and Information Services 11 45 66 21 8.Royalties and Licensing Fees 12 -90 6 96 9.Consulting Services 13 53 159 106 10.Advertising and Public Opinion Polling 14 6 20 15 11.Audio-visual and Related Services 15 -2 1 3 12. Other Business Services 16 129 255 127 13. Government Services, n.i.e. 17 -1 7 8 B. Income 18 182 1,035 853 1.Compensation of Employees 19 84 95 11 2.Investment Income 20 98 940 842 C. Current Transfers 21 302 351 49 1.General Government 22 -2 0 2 2.Other Sectors 23 304 351 47 II. Capital and Financial Account 24 1,301 7,751 6,450 A. Capital Account 25 34 36 2 B. Financial Account 26 1,266 7,715 6,449 1. Direct Investment 27 865 1,449 584 1.1 Abroad 28 -375 52 427 1.2 In China 29 1,240 1,396 157 2. Portfolio Investment 30 68 394 325 2.1 Assets 31 -78 201 279 2.1.1 Equity Securities 32 -77 78 155 2.1.2 Debt Securities 33 -1 123 124 2.1.2.1 Bonds and Notes 34 10 98 88 2.1.2.2 Money Market Instruments 35 -11 25 36 2.2 Liabilities 36 146 193 46 2.2.1 Equity Securities 37 158 186 27 2.2.2 Debt Securities 38 -12 7 19 2.2.2.1 Bonds and Notes 39 -12 7 19 2.2.2.2 Money Market Instruments 40 0 0 0 3. Other Investment 41 333 5,873 5,540 3.1 Assets 42 -1,075 445 1,520 3.1.1 Trade Credits 43 -616 5 621 Long-term 44 -43 0 43 Short-term 45 -573 4 578 3.1.2 Loans 46 -199 126 326 Long-term 47 -198 0 198 Short-term 48 -2 126 128 3.1.3 Currency and Deposits 49 -360 213 573 3.1.4 Other Assets 50 100 101 0 Long-term 51 0 0 0 Short-term 52 100 101 0 3.2 Liabilities 53 1,409 5,428 4,020 3.2.1 Trade Credits 54 583 583 0 Long-term 55 41 41 0 Short-term 56 542 542 0 3.2.2 Loans 57 441 4,183 3,742 Long-term 58 74 178 104 Short-term 59 367 4,005 3,638 3.2.3 Currency and Deposits 60 389 649 260 3.2.4 Other Liabilities 61 -4 13 17 Long-term 62 -4 0 5 Short-term 63 1 13 13 III. Reserves Assets 64 -2,860 0 2,860 3.1 Monetary Gold 65 0 0 0 3.2 Special Drawing Rights 66 -1 0 1 3.3 Reserves Position in the Fund 67 -17 0 17 3.4 Foreign Exchange 68 -2,843 0 2,843 3.5 Other Claims 69 0 0 0 c. Net Errors and Omissions 70 -480 0 480 Note: 1. This statement employs rounded-off numbers. 2. The data for the first three quarters of 2010 are the sum total of the data for Q3 and for H1 of 2010. 3. As of the third quarter of 2010, in accordance with international standards, the undistributed profits and profits that have been distributed but not remitted shall be recorded in the Balance of Payments statement; the data for the previous two quarters have been adjusted accordingly. 2010-12-28/en/2010/1228/972.html
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At the end of September 2010, China's outstanding external debt (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province) reached USD546.449 billion. Specifically, the outstanding registered external debt reached USD326.549 billion and the balance of trade credit totaled USD219.9 billion. With respect to terms, outstanding long- and medium-term external debt (with the remaining term) was USD177.008 billion, accounting for 32.39 percent of the outstanding external debt. Outstanding short-term external debt (with the remaining term) was USD369.441 billion, accounting for 67.61 percent of the outstanding external debt. Specifically, the outstanding registered short-term external debt (with the remaining term) was USD149.541 billion and the balance of trade credit was USD219.9 billion. In terms of the composition of the debt, trade credit and trade financing (e.g., credit support to foreign trade provided by banks) accounted for 59.52 percent and 18.65 percent of the outstanding short-term external debt 2010 (the remaining term) respectively at the end of September. The trade credit and trade financing accounted for 78.17 percent of the outstanding short-term external debt (the remaining term). The data are closely associated with the dramatic growth of Chinas foreign trade during recent years. Because trade credit and trade financing are conducted against a real foreign trade background, they generally will not result in extra external debt risks. In terms of the types of debtors, the outstanding debt of Chinese-funded financial institutions was USD133.679 billion, accounting for 40.94 percent of the total outstanding registered external debt; the outstanding debt of foreign-funded enterprises was USD101.038 billion, accounting for 30.94 percent; the outstanding debt of foreign-funded financial institutions was USD46.971 billion, accounting for 14.38 percent; the outstanding sovereign debt borrowed by ministries under the State Council was USD38.571 billion, accounting for 11.81 percent; the outstanding debt of Chinese-funded enterprises was USD5.901 billion, accounting for 1.81 percent; and the outstanding debt of other institutions was USD389 million, accounting for 0.12 percent. In terms of the types of debt, the balance of international commercial loans amounted to USD254.591 billion, accounting for 77.96 percent of the outstanding registered external debt, with the proportion rising by 3.54 percentage points compared with that at the end of 2009. The balance of foreign government loans and loans granted by international financial organizations amounted to USD71.958 billion, accounting for 22.04 percent. In terms of the currency structure, debt in US dollars accounted for 71.91 percent of the outstanding registered external debt, representing an increase of 4.15 percentage points compared with that at the end of 2009. Debt in Japanese yen accounted for 10.29 percent, representing a decline of 1.6 percentage points compared with that at the end of 2009. Debt in euro accounted for 4.32 percent, a decline of 2.06 percentage points compared with that at the end of 2009; other kinds of debt, including SDRs and HKD, accounted for 13.48 percent, a decline of 0.49 percentage point compared with that at the end of 2009. In terms of the sectors in which the debts are invested, with reference to the Industrial Classification of the National Economy, USD43.821 billion was invested in the manufacturing sector, accounting for 21.45 percent of the medium- and long-term outstanding registered external debt (based on contract terms); USD25.778 billion was invested in the transportation, warehousing, and postal service sectors, accounting for 12.91 percent; USD17.907 billion was invested in the production and supply of electricity, coal gas, and water, accounting for 8.97 percent; USD12.05 billion was invested in the information technology service sector, accounting for 6.04 percent; USD10.687 billion was invested in the real estate sector, accounting for 5.35 percent. From January to September 2010, medium- and long-term external borrowing totaled USD27.847 billion, an increase of USD14.002 billion or 101.13 percent over that during the same period of 2009; repayment of the principal was USD17.904 billion, a decrease of USD8.055 billion, or 31.03 percent, over that during the same period of 2009. Interest payments totaled USD2.031 billion, a decrease of USD532 million, or 20.76 percent. Addendum: Definition of terms and interpretations Trade credit refers to external liability arising from directly extending credit between the seller and buyer of goods transactions, specifically transactions between residents in Mainland China and foreign non-residents (including non-residents in Hong Kong SAR, Macao SAR, and Taiwan Province), i.e., debt incurred due to the difference between the time of payment and the time of the transfer of ownership of the goods. Trade credit includes credit directly provided by the supplier (e.g., the overseas exporter) for commodity transactions and services, and advance payments by buyers (e.g., overseas importers) for goods, services, and on-going business (or business to be undertaken). Trade financing refers to a loan related to trade extended by a third party (e.g., banks) to an exporter or importer--for instance, a loan extended by a foreign financial institution or an export credit agency to a buyer. Trade-related credit is a broad concept. In addition to trade credit, it also involves other kinds of credit provided for trade activities. As it is defined, trade-related credit includes trade credit, trade financing, short-term notes related to trade, and so forth. 2011-01-19/en/2011/0119/978.html
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In order to regulate foreign exchange receipts and payments associated with cross-border trade of environmental equities such as CO2 emissions reductions, the State Administration of Foreign Exchange recently promulgated the Circular of the General Affairs Department of the State Administration of Foreign Exchange on the Handling of Foreign Exchange Business Associated with the Trade of Environmental Equities Such as Carbon Dioxide Emissions Reductions (Hui Zong Fa [2010] No. 151), hereinafter referred to as the Circular). The Circular will come into force as of the date of promulgation. The Circular mainly covers three areas: (1) When handling the procedures for receipts from cross-border trade of environmental equities, such as carbon dioxide emissions reductions, banks may handle the settlement of foreign exchange for domestic institutions or open a capital account foreign exchange account for the trade of environmental equities to preserve the relevant categories of foreign exchange earnings after examining the materials proving the authenticity of the relevant business according to the regulations and based on the needs of domestic institutions; (2) Domestic institutions such as environmental exchanges, emissions rights exchanges, and forest ownership exchanges may, upon approval of the State Administration of Foreign Exchange, open a foreign exchange account for the collateral of special tradefor deposits of collateral, to-be-paid commissions, and taxes by intended transferees, foreign exchange margins that should be refunded to intended transferees in cases of failure of payment, and collateral transferred to sellers and commissions and taxes deducted by the exchanges after conclusion of the relevant transactions; (3) The relevant requirements for the examination of materials, submission of information, registration of basic information, declaration of BOP statistics, and so forth are specified. Promulgation of the Circular will play an active role in facilitating cross-border trade of environmental interests such as CO2 emissions reductions as well as in promoting the healthy development of a low carbon economy. 2010-12-31/en/2010/1231/976.html
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In order to increase the efficiency of the use of funds by domestic enterprises, to further promote the facilitation of trade, and to support the going globalmove of domestic enterprises, the State Administration of Foreign Exchange recently promulgated the Circular on the Implementation of Administration of Overseas Deposits of Export Proceeds (Hui Fa [2010] No.67, hereinafter referred to as the Circular) in accordance with the relevant provisions in the Regulations of the Peoples Republic of China on Foreign Exchange Administration, in which it is decided that as of January 1, 2011 the SAFE will implement on a nationwide scale the Interim Measures for the Administration of Overseas Deposits of Export Proceeds from Trade in Goods and the instructions for operations based on the results of a pilot operation. The Circular covers four principal areas: (1) implementing an account-opening registration system for overseas deposits of export proceeds by domestic enterprises. Domestic enterprises that meet the requirements regarding the sources of export proceeds, have a need for overseas payments, and have operated in compliance with the foreign exchange administration regulations over the past two years may apply to the local foreign exchange authorities to make overseas deposits of their export proceeds; (2) implementing scaled management of overseas deposits of export proceeds by domestic enterprises. The scale of export proceeds deposited overseas shall be submitted by the domestic enterprises to the local foreign exchange authorities based on their actual needs, and the latter shall register and put on file the relevant scales; (3) streamlining the procedures for export verification and writing-off, online inspections, and so forth, and implementing an ex post reporting system; (4) carrying out off-site monitoring of the receipts and payments in overseas accounts of domestic enterprises, and implementing on-site inspections of abnormal circumstances. The launch of the policy represents a significant move on the part of the SAFE to further satisfy needs for the development of a market-oriented economy, deepen the reform of the foreign exchange administration system, and promote the facilitation of trade. The policy will play an active role in balancing cross-border fund flows under trade, facilitating cross-border fund operations by domestic enterprises, and bolstering the going globalmove by domestic enterprises. The policy will play a positive role for enterprises with frequent receipts and payments from cross-border trade to reduce the costs of cross-border transfers of foreign exchange funds and the costs of currency conversion. The policy will also play a positive role for enterprises to have greater involvement in international competition and stronger ability for group management, to raise the efficiency of the use of funds, lower the costs of overseas fundraising, and further sharpen the competitive edge of enterprises on the international markets. 2010-12-31/en/2010/1231/975.html
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According to the statistical data released by the State Administration of Foreign Exchange (SAFE), in November 2010 the amount of foreign exchange settlements and foreign exchange sales by banks on behalf of clients amounted to USD129.7 billion and USD84.4 billion respectively. The foreign exchange settlement and sales surplus was USD45.3 billion. In the month of November, foreign-related receipts and payments of domestic banks on behalf of clients amounted to USD183.5 billion and USD151.8 billion respectively; and the foreign-related receipts and payments surplus reached USD31.7 billion. 2010-12-24/en/2010/1224/971.html
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According to the statistical data released by the State Administration of Foreign Exchange (SAFE), in October 2010 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD125.3 billion and USD67.7 billion respectively. The surplus of foreign exchange settlement and sales amounted to USD57.6 billion. During the month, foreign-related receipts and payments by domestic banks on behalf of clients amounted to USD166.4 billion and USD127.2 billion respectively. The surplus of foreign-related receipts and payments reached USD39.2 billion. 2010-11-30/en/2010/1130/969.html
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The SAFE recently released China ’s International Investment Position as of the end of June 2012. The statistics reveal that as of the end of June 2012 external financial assets hit USD4946.2 billion, external financial liabilities reached USD3197.4 billion, and net external financial assets totaled USD1748.8 billion. Among the external financial assets, direct investments abroad totaled USD392.3 billion, portfolio investments USD 259.3 billion, other investments USD979.8 billion, and reserve assets USD3314.8 billion, respectively accounting for 8 percent, 5 percent, 20 percent, and 67 percent of the total. In terms of external financial liabilities, foreign direct investments totaled USD1903.2 billion, portfolio investments USD301.1 billion, and other investments USD993.2 billion, respectively accounting for 60 percent, 9 percent, and 31 percent of the total. The International Investment Position (hereinafter referred to as the IIP) is a statistical statement reflecting the stocks of financial assets and liabilities of one country or region to other countries or regions in the world at one specific point; together with the Balance of Payments Statement (BOP Statement) it constitutes the complete international accounts system, indicating the country’s or region’s trade flows. China’s International Investment Position Unit: 100 million US dollars Item # End-June, 2012 Net Position 1 17,488 A. Assets 2 49,462 1. Direct Investments Abroad 3 3,923 2. Portfolio Investments 4 2,593 2.1 Equity Securities 5 1,006 2.2 Debt Securities 6 1,587 3. Other Investments 7 9,798 3.1 Trade Credits 8 3,101 3.2 Loans 9 2,671 3.3 Currency and Deposits 10 3,577 3.4 Other Assets 11 448 4. Reserve Assets 12 33,148 4.1 Monetary Gold 13 542 4.2 Special Drawing Rights 14 118 4.3 Reserve Position in the Fund 15 88 4.4 Foreign Exchange 16 32,400 B. Liabilities 17 31,974 1. Foreign Direct Investments 18 19,032 2. Portfolio Investments 19 3,011 2.1 Equity Securities 20 2,469 2.2 Debt Securities 21 542 3. Other Investments 22 9,932 3.1 Trade Credits 23 2,901 3.2 Loans 24 4,110 3.3 Currency and Deposits 25 2,580 3.4 Other Liabilities 26 341 Note: 1. This IIP employs rounded-off numbers. 2. Net position refers to assets minus liabilities, “+” refers to net assets, and “-” refers to net liabilities. Compiling Principles and Indexes for the IIP I. Compiling Principles for the IIP In accordance with the standards of the Balance of Payments Manual (Fifth Edition) published by the International Monetary Fund (IMF), the IIP is a statistical statement which reflects the stocks of financial assets and liabilities of one country or region to other countries or regions in the world at a specific point. Changes in the IIP can be caused by changes in transactions, prices, or exchange rates, as well as by other adjustments during a specific period. The IIP is consistent with the BOP Statement with regard to the principles of valuation, measurement, and conversion, and together with the BOP Statement constitutes a complete international accounts system of the country or region. China ’s IIP is a statistical statement which reflects at a specific point the stocks of financial assets and liabilities of China (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province ) to other countries or regions in the world. II. Explanation of the Major IIP Indexes According to IMF standards, items on the IIP are categorized according to assets and liabilities. Assets are divided into direct investments abroad, portfolio investments, other investments, and reserve assets, and liabilities are divided into foreign direct investments, portfolio investments, and other investments. The net position refers to external assets minus external liabilities. The items are specifically defined as follows: 1. Direct investments: refer to external investments whereby an investor of one country operates an enterprise located in another country with the aim of acquiring effective control over the enterprise. They consist of direct investments abroad and foreign direct investments. Direct investments abroad include the stocks of direct investments abroad conducted by China ’s non-financial sectors, the stocks of capital and working capital allocated by domestic banks to set up branches overseas, as well as the stocks of loans between parent companies and subsidiaries both in China and abroad, and the stocks of other receivables and payables. Foreign direct investments include the stocks of foreign direct investments absorbed by China’s non-financial sectors, the stocks of direct investments overseas absorbed by the financial sectors (including foreign investments attracted by branches of foreign financial sectors and Chinese-funded financial sectors, and investments by foreign parties in joint financial sectors), as well as the stocks of loans between parent companies and subsidiaries both in China and abroad, and the stocks of other receivables and payables. 2. Portfolio investments: include some types of investments, such as shares, long- and medium-term bonds, and money-market instruments. Portfolio investment assets refer to negotiable securities, such as shares, bonds, money-market instruments, and derivative financial instruments, which are held by Chinese residents but issued by non-resident enterprises. Portfolio investment liabilities refer to shares and bonds held by non-resident enterprises but issued by resident enterprises. 2.1 Equity securities: consist of securities in the form of stocks. 2.2 Debt securities: include long- and medium-term bonds, short-term (one year or less) bonds, and money-market instruments or transferable debt instruments, such as short-term treasury notes, commercial papers, and large-sum short-term negotiable certificates of deposits. 3. Other investments: refer to all financial assets and liabilities, including trade credits, loans, currency, and deposits, as well as other assets and liabilities, but excluding direct investments, portfolio investments, and reserve assets. Long term refers to a contract period for the relevant financial assets/liabilities that is longer than one year, whereas short term refers to a contract period that is one year or less. 3.1 Trade credits: refer to direct business credits arising from the import and export of goods between China and other countries. Assets refer to the receivables of China 's exporters and the advance payments by China ’s importers, and liabilities refer to the payables of China ’s importers and the advance receipts of China 's exporters. 3.2 Loans: refer to the external assets held by domestic institutions by providing loans and lending to overseas institutions; and liabilities refer to loans borrowed by domestic institutions, such as loans from foreign governments, loans from international institutions, loans from foreign banks, and sellers’ credit. 3.3 Currency and deposits: Assets refer to the funds deposited abroad and the foreign cash in stock held by China 's financial institutions; and liabilities refer to overseas private deposits and short-term funds from foreign banks absorbed by China ’s financial institutions, as well as other short-term funds, for instance, loans from foreign exporters and individuals. 3.4 Other assets or liabilities: refer to investments other than trade credits, loans, currency, and deposits, for example, capital paid by non-currency international institutions and other receivables and payables. 4. Reserve assets: refer to external assets that can be used at any time and that are effectively controlled by the PBOC, consisting of monetary gold, special drawing rights (SDRs), the reserve position in the fund, and foreign exchange. 4.1 Monetary gold: refers to the gold held by the PBOC as reserve. 4.2 Special drawing rights: is a type of ledger asset, which is allocated by the IMF according to the capital share of its members; it can be used to repay debt to the IMF and can make up for a deficit in the balance of payments between the governments of member countries. 4.3 Reserve position in the fund: refers to assets in the ordinary accounts of the IMF that can be freely used. 4.4 Foreign exchange: refers to current assets and liabilities that are retained by the PBOC and that can be used as a means of international compensation. 2012-09-18/en/2012/0918/1069.html
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According to the statistical data released by the State Administration of Foreign Exchange (SAFE), in August 2012 the amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD127.8 billion and USD134.2 billion respectively. The deficit of foreign exchange settlement and sales amounted to USD6.3 billion. During the same period, the total amount involved in contracts for forward settlement of foreign exchange by banks on behalf of clients was USD14.5 billion, the total amount involved in contracts for forward sale of foreign exchange was USD15.7 billion, and net forward exchange sales totaled USD1.2 billion. During the first eight months of 2012, the cumulative amount of foreign exchange settlement and sales by banks on behalf of clients amounted to USD1000.4 billion and USD976.8 billion respectively. The surplus of foreign exchange settlement and sales was USD23.6 billion. During the same period, the cumulative amount involved in contracts for forward settlement of foreign exchange by banks on behalf of clients was USD110.2 billion, the cumulative amount involved in contracts for forward sale of foreign exchange was USD120.2 billion, and the cumulative amount of net forward sale of foreign exchange by banks on behalf of clients was USD10 billion. In August 2012, both foreign-related receipts and external payments by domestic banks on behalf of clients reached USD223.8 billion, thereby reaching an equilibrium of foreign-related receipts and payments. During the first eight months of 2012, the cumulative foreign-related receipts and payments by banks on behalf of clients amounted to USD1667.5 billion and USD1579.6 billion respectively; and the surplus of the cumulative foreign-related receipts and payments reached USD87.9 billion. Addendum: Glossary and relevant definitions The Balance of Payments refers to all economic transactions occurring between residents and non-residents in China , including all financial transactions and barter arrangements resulting in changes in the assets and liabilities of residents and non-residents Foreign exchange settlement and sales by banks refers to settlement and sales conducted by designated foreign exchange banks for their clients or for themselves, excluding transactions on the inter-bank foreign exchange market. Foreign exchange settlement and sales by banks on behalf of clients (including foreign exchange settlement and sales by the banks themselves) refers to settlement and sales by designated foreign exchange banks for their clients. The time of conversion between RMB and the foreign currency is regarded as the time-point for the statistics on the foreign exchange settlement and sales by the banks. Specifically, foreign exchange settlement refers to the sale of foreign exchange to designated foreign exchange banks by owners of foreign exchange; foreign exchange sales refers to the sale of foreign exchange by designated foreign exchange banks to users of foreign exchange. The differences between foreign exchange settlement and foreign exchange sales are regarded as an offset balance. Such differences, which will be offset by the banks through transactions on the inter-bank foreign exchange market, are a major factor resulting in changes in the country’s foreign exchange reserves. But they are not equivalent to the net change in foreign exchange reserves during the same period. The principle for transactions between residents and non-residents does not apply to the preparation of statistics on foreign exchange settlement and sales by banks on behalf of clients; such statistics only cover transactions of RMB and foreign currency between banks and their clients, namely, exchange transactions between RMB and foreign currency that fall outside the category of the balance-of-payments statistics. Contracts for forward settlement and sales of foreign exchange refers to the contracts for forward settlement (sales) of foreign exchange executed between banks and their clients through consultation, in which the foreign currency, amount, exchange rate, and term for the forward settlement (sale) of foreign exchange are agreed upon; where the foreign exchange is to be received (paid), the foreign exchange settlement (sale) is to be handled on the basis of the amount of foreign currency and the exchange rate specified in such contracts. The forward foreign exchange settlement and sales business enables enterprises to lock into the exchange rate in advance for future foreign exchange settlement or sales and to effectively avoid the risk of RMB exchange rate changes. Generally, banks will hedge the risk exposure arising from the forward foreign exchange settlement and sales business through the inter-bank foreign exchange market. For example, where the total amount involved in contracts for forward settlement of foreign exchange executed by banks is more than that in the contracts for forward sales of foreign exchange, the banks will generally sell an equivalent amount of foreign exchange in advance on the inter-bank foreign exchange market, and vice versa. Therefore, the forward settlement and sales of foreign exchange business is also a factor that affects changes in the foreign exchange reserves in China . Foreign-related receipts and payments by banks on behalf of their clients refers to receipts and payments occurring between domestic non-bank resident institutions/individuals (collectively called the “non-bank sector”) and non-resident institutions/individuals through domestic banks, exclusive of the receipts and payments in cash and foreign-related receipts and payments by the banks themselves. In particular, they include cross-border receipts and payments between non-bank sectors and non-residents through domestic banks (including RMB and foreign exchange), and domestic receipts and payments between non-bank sectors and non-residents through domestic banks (temporarily excluding receipts and payments in RMB between domestic individual residents and domestic non-resident individuals). Statistics are collected at the time when the clients conduct the foreign-related receipts and payments at the domestic banks. Specifically, foreign-related receipts of banks on behalf of clients refers to funds collected by non-bank sectors from non-residents via domestic banks; external payments by banks on behalf of clients refers to funds paid by non-bank sectors to non-residents through domestic banks. Although the foreign-related receipts and payments by banks on behalf of clients are an integral part of the balance-of-payments statistics, the accounting method for the statistics, different from the accrual basis of accounting required by the balance-of- payments statistics, is based on a cash basis. In addition, it merely reflects capital flows between the non-bank sectors and non-residents and does not include barter transactions or foreign transactions conducted by the banks themselves. Furthermore, the scope of the statistics on foreign-related receipts and payments of banks on behalf of clients is smaller than the scope of the balance-of-payments statistics. 2012-09-18/en/2012/0918/1070.html
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Question: The SAFE recently published preliminary data on China ’s balance of payments (BOP) in the first three quarters of 2012. Could you please introduce the current status of China ’s BOP? Answer: According to the preliminary data, China ’s BOP status continued to improve this year. First, receipts and payments under the current account maintained a basic equilibrium. In the third quarter, the current account surplus was USD70.6 billion. For the first three quarters, the cumulative surplus was USD147.8 billion, accounting for 2.6 percent of GDP during the same period, a drop of 0.3 percent compared with the same period of the last year, which continued to be within the internationally accepted reasonable level. Second, the capital account and financial account (including errors and omissions) was characterized by a net outflow. In the third quarter, the capital account and financial account witnessed a deficit of USD71 billion, after a deficit in the second quarter. For the first three quarters, the cumulative deficit was USD85.4 billion; however, the same period of the last year witnessed a surplus of USD234.1 billion. Third, growth of foreign exchange reserves slowed down significantly. In the third quarter, foreign exchange reserve assets calculated on the basis of the BOP coverage (setting aside the influence of changes in non-trade value, such as the exchange rate, and prices) increased only by USD0.3 billion. For the first three quarters, the total increase of such assets was USD64 billion, with the increment decreasing by 83 percent compared with the same period of the last year. Question: Both the second and third quarters of this year witnessed deficits in China ’s capital and financial account, and the first three quarters as a whole also witnessed a deficit. What is your opinion about this? Answer: From the beginning of this year, China ’s capital account and financial account witnessed deficits, which were mainly influenced by factors such as the international financial crisis and the slowdown in domestic economic growth. From the fourth quarter of 2011 to the end of the third quarter of this year, China ’s supply and demand in foreign exchange market witnessed a basic equilibrium, and foreign exchange reserves maintained basic stability. In such a situation, the current account surplus inevitably was accompanied by the deficits in the capital account and the financial account. At present, the deficits in the capital account and financial account of China have three major characteristics: First, the deficits reflect the process of “foreign exchange to be held by the people,” that is to say, the holder foreign exchange assets is shifted from the central bank to domestic institutions and individuals. For the first three quarters, the balance of foreign exchange deposits of market players such as enterprises increased by USD138.8 billion. The banks themselves increased the foreign exchange position by more than USD12 billion, part of which was used for domestic foreign exchange loans and the remainder of which was used by the banks for overseas loans and investments. Second, the deficits indicate an accelerating pace of the “Going Out” strategy by domestic enterprises. For the first three quarters, the amount of overseas direct investments by China ’s non-financial sector was USD52.5 billion, an increase of 29 percent compared with the same period of the last year. Third, the deficits reflect an orderly debt deleveraging process by the enterprises. For the past few years, domestic enterprises paid in foreign exchange for their imports as late as possible, by such means as the Import Bill Advance by Overseas Banks, and accumulated a lot of USD short positions under the trade account. The original strategy of incurring liabilities in foreign currency began to be adjusted after the bi-directional fluctuation of the exchange rate, and, in particular, under the regulation of relevant policies; with respect to the imports of enterprises, the debt balance under the Import Bill Advance By Overseas Banks dropped by more than USD40 billion. Question: Some media have recently said that USD200 to USD300 billion of capital has fled from China . Is this true? Answer: We think this is not true. The scale of capital flight referred to by some media is the estimated result of the reduction of such accounts as trade and direct investments due to changes in the foreign exchange reserves, and the concept and method for such calculations are not scientific. The capital account and financial account of the BOP statements are usually used internationally to measure the condition of cross-border capital flows. On the basis of such coverage, for the first three quarters of this year, the USD85.4 billion in deficits in the capital account and financial account of China (including errors and omissions) mainly due to the fact that under the recent basic stability of foreign exchange reserves, the assets in foreign exchange acquired by China from current account transactions such as trade were no longer held by the central bank. Rather, they were mainly held by domestic institutions and separate individuals, and such assets held by domestic institutions and individuals inevitably were used outside of China by such means as overseas investments, loans, and deposits, which presented an outflow of the capital account and the financial account but was not equal to capital flight. 2012-10-29/en/2012/1029/1073.html
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At the end of September 2012, China’s outstanding external debt (excluding that of Hong Kong SAR, Macao SAR, and Taiwan Province, the same below) reached USD770.833 billion. Specifically, the outstanding registered external debt totaled USD471.333 billion and the balance of trade credit between enterprises totaled USD299.5 billion. In terms of structure, the outstanding long- and medium-term external debt (with the remaining term) was USD198.017 billion and the outstanding short-term external debt (with the remaining term) was USD572.816 billion. Specifically, trade credit between enterprises and bank trade financing accounted for 52.29 percent and 21.12 percent respectively. Together, the two accounted for 73.41 percent of the outstanding short-term external debt (with the remaining term). In terms of type of debtor, the outstanding debt of Chinese-funded financial institutions was USD229.579 billion, accounting for 48.71 percent of the outstanding registered external debt; the outstanding debt of foreign-funded enterprises was USD 145.578 billion, accounting for 30.89 percent; the outstanding debt of foreign-funded financial institutions was USD53.316 billion, accounting for 11.31 percent. In terms of types of debt, the balance of international commercial loans amounted to USD404.921 billion, accounting for 85.91 percent of the outstanding registered external debt. The balance of foreign government loans and loans granted by international financial organizations amounted to USD66.412 billion, accounting for 14.09 percent. In terms of the currency structure, USD debt accounted for 77.45 percent, Euro debt accounted for 7.30 percent, and JPY debt accounted for 7.27 percent of the outstanding registered external debt; other kinds of debt including SDRs and HKD accounted for 7.98 percent of the outstanding registered external debt. In terms of the sectors in which the debt was invested, with reference to the Industrial Classification of the National Economy, the outstanding medium- and long-term registered external debt (based on contract terms) was mainly invested in the manufacturing sector, accounting for 28.92 percent, the transportation, warehousing, and postal sector, accounting for 14.01 percent, and the electric power, coal, gas, and water production and supply sector, accounting for 7.36 percent. In the first nine months of 2012, China newly borrowed USD30.987 billion of medium- and long-term external debt, repaid USD23.426 billion of principal of the long- and medium-term external debt, and paid USD1.749 billion of interest. Net inflows under the outstanding long- and medium-term external debt were USD5.812 billion, down 48.14 percent on a year-on-year basis. (End.) Addendum: Definitions of terms and explanations Classification of the term structure of external debt. There are two classification methods for the classification of external debt in terms of the term structure. First, classification on the basis of contract terms, i.e. classified as medium- and long-term external debt in cases of the contract term being over one year, and classified as short-term external debt in cases of the contract term being one year or less; second, classification on the basis of the remaining term, i.e., on the basis of the above classification method, the medium- and long-term external debt due within one year is classified as short-term external debt. For the convenience of differentiating between the two classification methods, in this news release indication of the classification method, i.e., contract term or remaining term, follows the medium- and long-term external debt and the short-term external debt. Trade credit between enterprises refers to the external liability arising from directly extending credit between the seller and buyer of goods, specifically transactions between residents in mainland China and foreign non-residents (including non-residents in Hong Kong SAR, Macao SAR, and Taiwan Province), i.e., debt incurred due to the difference between the time of payment and that of the transfer of the goods ownership. Trade credit between enterprises includes credit directly provided by the supplier (e.g., the overseas exporter) for commodity transactions and services, and advance payments made by buyers (e.g., overseas importers) for goods, services, and on-going business (or business to be undertaken). Bank trade financing refers to loans extended by a third party (e.g., banks) related to trade with exporters or importers, for instance, loans extended by foreign financial institutions or export credit agencies to buyers. Trade-related credit is a broad concept. In addition to trade credit between enterprises, it also includes other kinds of credits provided for trade activities. According to the definition, trade-related credit includes trade credit between enterprises, bank trade financing, short-term notes related to trade, and so forth. 2012-12-27/en/2012/1227/1075.html