According to the statistical data released by the State Administration of Foreign Exchange (SAFE), in July 2010 foreign exchange settlement and sales by banks on behalf of clients amounted to USD114.2 billion and USD87.6 billion respectively. The surplus of foreign exchange settlement and sales amounted to USD26.6 billion.
During the month of July 2010, foreign-related receipts and payments of domestic banks on behalf of clients amounted to USD162.2 billion and USD134.6 billion respectively. The surplus of foreign-related receipts and payments reached USD27.6 billion.
Annex: Definition of terms and interpretation
Balance of payments (BOP) refers to all economic transactions occurring between residents and non-residents in China, including all financial transactions and barter transactions resulting in any changes to assets and liabilities thereof.
Foreign exchange settlement and sales by banks on behalf of clients refer to foreign exchange settlement and sales conducted by designated foreign exchange banks for their clients, excluding data on foreign exchange settlement and sales conducted by designated foreign exchange banks on their own behalf and data on inter-bank foreign exchange market transactions. The time of conversion between Renminbi and foreign currency is regarded as the time-point for the statistics. Specifically, foreign exchange settlement refers to the sale of foreign exchange to designated foreign exchange banks by owners of foreign exchange; foreign exchange sales refer to the sale of foreign exchange by designated foreign exchange banks to users of foreign exchange. The differences between foreign exchange settlement and sales are regarded as an offset balance, which will be balanced by the banks through transactions on the inter-bank foreign exchange market. This is the major reason for changes in the amount of foreign exchange reserves, which is 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, and such statistics only cover transactions of RMB and foreign currencies between the banks and their clients, namely, exchange transactions between RMB and foreign currencies, which fall outside the category of the balance-of-payments statistics.
Foreign-related receipts and payments of banks on behalf of clients refer to receipts and payments occurring between domestic non-bank resident institutions and individuals (collectively called the non-bank sector) and non-resident institutions and individuals through domestic banks, which are exclusive of the receipts and payments in cash and foreign-related receipts and payments by the banks themselves. 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 (currently including receipts and payments in foreign exchange and receipts and payments in RMB under the RMB settlement item for cross-border trade). 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 refer to funds collected by non-bank sectors from non-residents via domestic banks; external payments by banks on behalf of clients refer to the funds paid by non-bank sectors to non-residents through domestic banks.
Although foreign-related receipts and payments of 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 fund flows between the non-bank sectors and non-residents, and does not include the barter transactions and foreign transactions conducted by the banks themselves. Furthermore, the scope of the statistics on the foreign-related receipts and payments of banks on behalf of clients is smaller than the scope of the balance-of-payments statistics.
