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
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
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.
