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The State Administration of Foreign Exchange (SAFE) recently disseminated the official data on the balance of payments (BOP) for the first quarter of 2016. The press spokesperson of the SAFE answered media questions on relevant issues. Q: The data recently disseminated by the SAFE show that the surplus in the current account plunged in the first quarter of 2016 on a year-on-year basis. What are the main reasons behind? What are the outlooks for the current account? A: The current account registered a surplus of USD 39.3 billion in the first quarter of 2016, down by 54% year on year (same below) for the reasons as follows: First, the surplus in trade in goods fell. Trade in goods in the balance of payments registered a surplus of USD 103.9 billion in the first quarter, down by 11%. Dragged by sluggish demand in global markets, exports dropped by 12%, versus growth of 0.3% in the same period last year, while imports fell by 12%, lower than 16% in the same period last year, thanks to the stable domestic economy and pick-up of commodity prices, which, coupled with a high export base, resulted in a lower surplus in trade in goods. Second, the deficit in trade in services grew. Trade in services registered a deficit of USD 57.6 billion in the first quarter, up by 47%. The major component of the deficit was the deficit in travel, which hit USD 55.4 billion, up by 33%. This shows that, driven by China's enhancing economic strength and its people's increasing income, people's actual power for overseas purchasing has been strengthened and their demand for traveling, studying and seeking medical help abroad is enhancing. It is expected that the current account will remain in surplus in the near future, with its ratio to GDP still at an international rational level. First, trade in goods will remain in surplus. The slow recovery of the global economy has been favorable for stabilizing China's external demand, with its exports recovering in March-May, but as global commodity prices remain low, and China's domestic demand stays stable, its imports will continue to be greatly lower than exports. Second, trade in services and other accounts will remain in deficit. Overall, the current account led by trade in goods will continue to register a surplus, and its ratio to GDP is expected to be consistent with the level for recent years. Q: The data recently disseminated by the SAFE show that the non-reserve financial account remained in deficit in the first quarter of 2016. What would you say about this? What are your perspectives into the future BOP status? A: The deficit in the non-reserve financial account (excluding reserve assets, same below) shows domestic players have made heavier outbound investment and reduced their external debt. In the first quarter of 2016, the financial account recorded a deficit of USD 123.3 billion, up by 9% year on year and down by 26% quarter on quarter. On the one hand, domestic players participated in international economic activities more actively but were more sensible than in the fourth quarter of 2015. External assets for the first quarter rose by USD 109.8 billion, which was up by 35% year on year or down by 3% quarter on quarter. Those in direct investment and other investment went up by USD 57.4 billion and USD 28.7 billion respectively, which was up by 77% and 26% year on year, or down by 13% and 6% quarter on quarter. On the other hand, Chinese companies' external debt fell further, but they were slow in deleveraging. The external debt for the first quarter dropped by USD 13.5 billion, which was down by 57% year on year or 75% quarter on quarter. Net outflows under other external debt for investment amounted to USD 38.5 billion, down by 67% year on year and quarter on quarter respectively. But overseas capital under direct investment recorded heavy net inflows, showing overseas long-term capital remains confident in China. The pressure on China from cross-border capital outflows has been relieved recently. The deficit in banks' settlement and sales of foreign exchange dropped by 35% and 47% in April and May on a quarter-on-quarter basis. The deficit in banks' foreign-related receipts and payments for customers was down by 66% quarter on quarter in April, but banks' foreign exchange receipts and payments for customers turned around in May. The balance of foreign exchange reserves fell by a monthly average of USD 10.4 billion in April and May, much lower than the monthly average decrease of USD 39.3 billion in the first quarter. China's BOP is expected to find a basic level of equilibrium in 2016, with continued surpluses in the current account and deficits in the capital and financial account. On the one hand, driven by policies and measures for economic restructuring, production capacity adjustment and industry upgrading, China's economy will sustain a mid-to-high growth rate, the current account led by trade in goods will remain in surplus, foreign exchange reserves will continue to be adequate, and its capability against the impact from cross-border capital flows will be strong, which will make China attractive to long-term foreign investment. On the other hand, under the new normal of economic transformation and upgrading, domestic players will raise their awareness of participation in international economic development, which will drive them to make rational arrangements for cross-border investment and financing based on domestic and overseas situations and their development needs. Under such circumstances, China's BOP is expected to find a basic level of equilibrium as its cross-border capital will display a pattern of alternation of inflows and outflows and bidirectional fluctuations. 2016-08-30/en/2016/0830/1208.html
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The State Administration of Foreign Exchange (SAFE) recently published the statistics on banks' foreign exchange settlement and sales, and their foreign-related receipts and payments for customers for May 2016. A press spokesperson for the SAFE answered media questions on the recent cross-border capital flows. Q: The pressure on China from cross-border capital outflows has been eased since the beginning of this year. What is the case for May? A: China witnessed further balanced foreign exchange supply and demand in May. First, the deficit in banks' foreign exchange settlement and sales continued to shrink. In May 2016, the deficit hit USD 12.5 billion, down by 47% month-on-month, and the daily average deficit declined for the fifth consecutive month. The deficit was USD 54.4 billion, 33.9 billion, 36.4 billion and 23.7 billion in the four months from January to April respectively. Second, the deficit in foreign-related receipts and payments of the non-banking sectors expanded but the foreign exchange receipts and payments turned around from deficits. In May, the deficit was USD 23.5 billion, compared with USD 55.8 billion, USD 30.5 billion, USD 26.1 billion and USD 8.9 billion respectively from January to April. But foreign exchange receipts and payments of the non-banking sectors posted a slight surplus of USD 200 million in May, versus the deficit of USD 20.1 billion, USD 10.5 billion, USD 5.9 billion and USD 2 billion respectively from January to April. Chinese market players continued to steadily adjust their foreign-related receipt and payment behaviors. First, their desire to purchase foreign exchange was further weakened, and some channels' foreign exchange financing rose remarkably. In May, the foreign exchange sales rate that measures the motive to buy foreign exchange, or the foreign exchange purchased by customer from banks as a percentage of their foreign-related foreign exchange payments, was 73%, 2 percentage points lower than that of April. Meanwhile, the balance of import financing such as refinancing and forward L/C rose by USD 300 million, of which, the balance of foreign exchange financing climbed by USD 7.4 billion, 113% higher than that of April. This was the third consecutive month the balance had picked up, suggesting slow deleveraging of external debt of enterprises. Second, market players' desire to settle foreign exchange continued to rise and domestic foreign exchange deposits dropped. In May, the foreign exchange settlement rate that measures the desire to settle foreign exchange, or the foreign exchange sold by customers to banks as a percentage of their foreign-related foreign exchange income, was 67%, 4 percentage points higher than that of April. Meanwhile, the balance of foreign exchange deposits contracted by USD 8.8 billion, compared with an increase of USD 900 million in April. All these show companies' and individuals' desire to hold foreign exchange was weakened. Since the beginning of this year, the pressure on China from cross-border capital outflows has been eased gradually, which further reflects China's economic fundamentals. This also indicates that China's overall economic operation that is within expectation, its further optimized economic structure and mid and high economic growth will provide a solid foundation for China's cross-border capital flows to sustain mid and long-term stability. 2016-08-30/en/2016/0830/1207.html
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The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' sales and settlements of foreign exchange and on foreign-related receipts and payments via banks for their customers for August 2016. The SAFE press spokesperson answered media questions on recent cross-border capital flows. Q: What new changes were there to the cross-border capital flows for August? A: The pressure on China from cross-border capital outflows was relieved in August. First, a narrower deficit was recorded under banks' sales and settlements of foreign exchange. The deficit was USD 9.5 billion for the month, down by 70% month-on-month and the lowest monthly level since July 2015. Second, a lower deficit was registered under the non-banking sector's foreign-related receipts and payments. The deficit was USD 8 billion for the month, down by 75% month-on-month. In particular, the balance of foreign exchange receipts and payments turned from a deficit of USD 1.3 billion in July to a surplus of USD 19.7 billion in the month. A deficit of USD 27.7 billion was posted under the RMB receipts and payments, down by 10% month-on-month. The factors that boost supply and demand towards an equilibrium continued to play an active role. First, the willingness of market players to settle foreign exchange was being stabilized, with the share of foreign exchange sales dropping further. In the month, the ratio of bank customers' sales of foreign exchange to the foreign-related foreign exchange receipts was 59.2%, up by 0.9 percentage point from July; the ratio of bank customers' purchases of foreign exchange to the foreign-related foreign exchange payments was 67.4%, down by 1.3 percentage points from July. Second, cross-border foreign exchange financing through some channels continued to pick up. As at the end of August, the balance of cross-border financing for imports such as refinancing and forward L/C jumped by USD 7.9 billion from the end of July, marking the 6th consecutive month of growth. Also in the month, a net inflow of USD 6.1 billion was registered under enterprises' cross-border foreign exchange loans, remarkably higher than the net monthly average inflow of USD 700 million from May to July. Third, seasonal demand for purchasing foreign exchange like ROI waned. In history, June and July were the peak months for outward remittances of profits by foreign-funded enterprises and for distribution of bonuses and dividends by overseas listed companies, followed by downturns. In August, foreign exchange purchases under ROI fell by 31% month-on-month. In addition, August remained the month witnessing strong purchases of foreign exchange under overseas travel and study, but the foreign exchange purchases under travel dropped by 3% month-on-month or 16% year-on-year in the month, which suggests that a large part of individuals' demand for foreign exchange purchases was unleashed in the early phase, and that individuals are sensible in purchasing foreign exchange at present. Overall, China's economy operates smoothly, the RMB exchange rate against the USD is fluctuating bi-directionally, and market sentiment is stable now, which is favorable for a stronger equilibrium between supply and demand of foreign exchange. 2016-09-19/en/2016/0919/1211.html
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Q: What would you say about the changes to the data on China's external debt as at the end of March? A: Overall, China's external debt has dropped more slowly and its solvency risk is within control. First, the decrease in outstanding external debt has slowed down significantly. As at the end of March 2016, China's outstanding full-scale external debt was equivalent to USD 1.3645 trillion, down by USD 51.7 billion or 3.6% from the end of 2015, or by 3.8 percentage points quarter on quarter. Second, the term structure of external debt has been further optimized. As at the end of March 2016, short-term outstanding external debt was down by 8% from the end of 2015, while that of mid- and long-term external debt was up by 4% from the end of 2015. Third, the decrease in external debt is closely related to the declines in foreign trade. China registered RMB 5.2 trillion in trade value under trade in goods in the first quarter of 2016, down by 5.9% year on year. Accordingly, the balance of trade credit and prepayments dropped as at the end of March, contributing 66% to the total decrease in external debt. Last but not least, as China's economic restructuring deepens, some companies' external debt such as inter-company loans has bottomed out after preliminary debt deleveraging. As at the end of March 2016, the outstanding inter-company loans rose by USD 14.9 billion or 7% from the end of 2015. Further facilitation will be provided for cross-border financing by financial institutions and companies. According to the Circular on Rolling out Nationwide Macro-prudential Management of Full-scale Cross-border Financing (Yinfa No. 132 [2016]), the pilot program for macro-prudential management of full-scale cross-border financing in domestic and foreign currencies will be rolled out to financial institutions and companies across the country starting from May 3, 2016. From then on, the People's Bank of China and the State Administration of Foreign Exchange (SAFE) will not conduct ex-ante approval for external debt to be owed by financial institutions and companies, and these institutions and companies will be allowed to make cross-border financing in domestic and foreign currencies independently within the upper limit that is linked with their capital or net assets. China's external debt is expected to be stabilized. Given the changes to the external debt data, it is expected that China's external debt will be stabilized as the macro-prudential management policy for full-scale cross-border financing is implemented. Next, the SAFE will continue to build and improve the external debt and capital flow management system under the macro-prudential management framework, and enhance ongoing and ex-ante monitoring and analysis to guard against the risks arising from unusual cross-border capital flows. 2016-08-31/en/2016/0831/1209.html
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Recently，the State Administration of Foreign Exchange (SAFE) has released the external financial assets and liabilities data of China's banking industry (excluding the central bank, the "banking industry") for the first time. Statistics show that China's banking industry recorded external financial assets of USD 721.6 billion, external liabilities of USD 943.7 billion, and net external liabilities of USD 222.1 billion including net RMB external liabilities of USD 378.3 billion and net foreign currency assets of USD 156.2 billion as at the end of December 2015. Of the external financial assets of the banking industry, deposits and loans were USD 574.7 billion, bonds investment, USD 48.4 billion, and other assets including equity, USD 98.5 billion, accounting for 80%, 7% and 14% of the industry's total external financial assets respectively. By currency, RMB assets were USD 57.9 billion, USD assets, USD 528.5 billion, and other currency assets, USD 135.2 billion, accounting for 8%, 73% and 19% respectively. Of the banking industry's external liabilities, deposits and loans were USD 485.8 billion, bonds investment, USD 137.5 billion, and other liabilities including equity, USD 320.4 billion, accounting for 51%, 15% and 34% of the industry's external liabilities respectively. By currency, RMB liabilities were USD 436.2 billion, USD liabilities, USD 229.8 billion, and other currency liabilities, USD 277.7 billion, accounting for 46%, 24% and 29% respectively. At the end of 2015, the SAFE wrote to the Bank for International Settlements (BIS), confirming its official participation in the International Banking Statistics (IBS), which is part of the G20 Data Gaps Initiative. The compiling principle of the IBS is consistent with the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) published by the IMF. The external financial assets and liabilities data of China's banking industry, compiled in line with IBS, will be released by the SAFE on a quarterly basis. Publishing the data helps to reflect the foreign-related business operations of China's banking industry, and the global allocation of their assets and liabilities, which are significant for further enhancing statistical data transparency and monitoring cross-border capital flows and stocks of assets and liabilities. 2016-08-30/en/2016/0830/1205.html
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Q: Foreign media recently reported that Terex terminated the acquisition negotiation with Zoomlion because "the SAFE didn't allow Zoomlion to raise funds for closing the deal". Is this true? A: We also have noted relevant reports. Zoomlion has given explanations why the negotiation with Terex was terminated. There are no policy barriers to the deal because of foreign exchange administration, so the reports are not true to the fact. China has increased its ODI in recent years, showing China's dramatically strengthened overall strengths and enterprises' requirements for optimizing global allocation of their assets. The SAFE has been committed to promoting administration streamlining and power delegation, supporting qualified and competent companies to go global, and improving companies' capabilities in international operation, while enhancing ongoing and ex-post monitoring and management, and cracking down on false ODIs to boost the healthy and orderly development of ODIs. 2016-08-30/en/2016/0830/1206.html
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On June 16, 2016, Professor Lawrence H. Summers, a famous US economist, was invited to give a lecture at the State Administration of Foreign Exchange (SAFE). The lecture was chaired by Pan Gongsheng, Deputy Governor of the People's Bank of China (PBC) and Administrator of the SAFE, and attended by relevant officials from the PBC and the SAFE. Professor Summers introduced the changes to the global and US economic and financial environments and the trends of the global and US economic and financial policies. Both sides exchanged ideas and had heated discussions on the trends of post-crisis financial regulatory adjustments in face of the low interest rates and the coordination of monetary policies and fiscal policies. 2016-08-31/en/2016/0831/1210.html
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Pan Gongsheng, Deputy Governor of the People's Bank of China and Administrator of the State Administration of Foreign Exchange (SAFE), has recently met with William Conway, Co-founder and Co-CEO of The Carlyle Group in Beijing. The two sides exchanged ideas on global economic and financial trends and the exchange rate movements of major economies. According to Administrator Pan Gongsheng, the currencies of major developed and emerging markets have depreciated recently on the rising expectations of the Fed's interest rate hikes. So has the RMB exchange rate against the USD. Nevertheless, the RMB exchange rate has stayed stable compared with other international reserve currencies and currencies of emerging market economies, falling slightly at the global level. Further, the RMB has appreciated against a basket of multilateral exchange rates. China's economy has been operating steadily, featuring positive progress in restructuring, faster growth of the new economic dynamics and stable financial markets. Under such circumstances, the RMB exchange rate will remain stable at a reasonable and even level, and there are no grounds for continuous depreciation. 2016-10-31/en/2016/1031/1213.html
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Monthly Foreign Exchange Reserves,2008 (in billions of US dollars ) End of Month Forex Reserves Jan 1589.810 Feb 1647.134 Mar 1682.177 Apr 1756.655 May 1796.961 Jun 1808.828 Jul 1845.164 Aug 1884.153 Sep 1905.585 Oct 1879.688 Nov 1884.717 Dec 1946.030 2011-09-20/en/2011/0920/572.html
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Monthly Foreign Exchange Reserves,2006 (in billions of US dollars ) End of Month Forex Reserves Jan 845.180 Feb 853.672 Mar 875.070 Apr 895.040 May 925.020 Jun 941.115 Jul 954.550 Aug 972.039 Sep 987.928 Oct 1009.626 Nov 1038.751 Dec 1066.344 2011-09-20/en/2011/0920/574.html