·                      [Wang Yungui]: Good morning, friends from the press. Welcome to the press conference of the State Administration of Foreign Exchange (SAFE) on policies during the fourth quarter of 2014. I am Wang Yungui, director of the Comprehensive Department at the SAFE. We are very pleased to have with us today Guo Song, director of the Capital Account Department, Zhang Shenghui, director of the Management and Inspection Department, and Xiao Lihong, inspector of the Current Account Management Department. First, I would like to brief you on behalf of the SAFE on foreign exchange administration policies. [10:12]  

·                     [Wang Yungui]: Following the spirit of the Eighteenth National People's Congress, the Third and Fourth Plenary Sessions of the Eighteenth CPC Central Committee and the principles of seeking progress while maintaining stability and carrying out reforms and innovations based on the plans of the CPC Central Committee and the State Council, since the beginning of 2014 the SAFE has accelerated administrative streamlining, power delegation, and functional transformation, has further promoted foreign exchange administration reforms, and has enhanced monitoring and management of cross-border capital flows, with the aim of improving the capability of the foreign exchange administration to serve the real economy and to promote restructuring, transformation, and upgrading. The main measures are as follows: [10:13]   

·                     [Wang Yungui]: First, improving foreign exchange administration for trade in goods and trade in services to offer conveniences while also preventing risks [10:14]  

·                     [Wang Yungui]: Based on the requirements and plans of the State Council to support stable foreign trade growth and to promote the development of trade in services, in 2012 the SAFE promoted foreign exchange administration reform for trade in goods throughout China, canceling the requirements that the foreign exchange receipts and payments of import and export companies be verified; in 2013 it conducted foreign exchange administration reform for trade in services, canceling approvals for cross-border receipts and payments of foreign exchange under trade in services, especially for each transaction of less than USD 50,000. With these two reforms, more than 80 percent of China's foreign exchange receipt and payment transactions are subject to market-based resource allocations, and foreign-related companies have seen significant improvements in the efficiency of foreign exchange turnovers and conversions and in their capability to manipulate capital against international competition. While canceling ex ante approvals, the SAFE has stressed interim and ex post regulation and has established a series of innovative and effective risk prevention measures. Classified regulation measures, for example, require that suspected companies during ex post examinations be classified as class-B or class-C companies for intensive monitoring or inspections of transactions. Another measure is risk warning letters. Mega data analytical technology is used to identify companies with abnormal transactions and then a risk warning letter is sent to warn the companies against incompliance in their use of foreign exchange and requiring them to provide explanations or verifications. With these fundamental reforms, trade facilitation in terms of foreign exchange is maximally ensured and the systems and mechanisms to prevent the risks of systematic cross-border capital flows have been strengthened. [10:15]  

·                     [Wang Yungui]: Second, steadily promoting the reform of foreign exchange administration under the capital account, with a focus on addressing the difficulties of foreign-related companies in financing and reducing the costs of financing [10:15]  

·                     [Wang Yungui]: There are nearly 800,000 foreign-funded enterprises in China and more than 25,000 Chinese companies overseas. Both have a strong demand for financing but they encounter many difficulties. To address these difficulties and to reduce the costs of financing, since the beginning of this year the SAFE has introduced many measures. [10:16]    

·                     [Wang Yungui]: First, simplifying administration procedures for foreign exchange under cross-border credit. Ex ante approvals for external debts, sub-loans of external debts, and external debt registration by financing and leasing companies have been canceled, allowing companies to open accounts, charge to an account, and settle foreign exchange with banks directly after first-time registration, thus significantly reducing their financial costs. Three weekdays can be saved for external debt transactions from the time of account opening to the settlement of foreign exchange. Since this policy was introduced in May 2013, more than 30,000 external debt accounts have been opened, nearly 200,000 transactions of withdrawals, principal payments, and foreign exchange settlements have occurred, recording a daily average business volume of approximately 600 transactions. [10:16]  

·                     [Wang Yungui]: Second, significantly simplifying cross-border guarantee procedures for financing. Financing guarantee indicators for banks and for Chinese companies have been canceled for both overseas loans under domestic guarantees and domestic loans under overseas guarantees, for all approvals for signing contracts, for all ex ante verifications of the performance of contracts, and for the majority of the qualification restrictions. For example, previously an overseas Chinese-invested company could not receive loans from a local bank due to the lack of qualified credentials or collateral, but since the reform, its domestic parent company is allowed to provide guarantees so that overseas banks can extend loans. This policy has enabled numerous overseas Chinese-invested companies to receive credit support from its domestic parent company for overseas financing. Likewise, a foreign-invested company in China can receive relatively cheap loans from a Chinese bank through a cross-border guarantee from its parent bank that is based outside of China. Since the launch of the reform, banks and companies have seen stable growth in their cross-border guarantee business, with a low performance ratio, which indicates that banks and companies have strict control over cross-border guarantee risks and are able to identify risks. Estimates show that this policy can help companies save financial expenses by about 2 percent and it can shorten the time for the handling of business. Therefore, it has been applauded by banks and companies. [10:17]  

·                     [Wang Yungui]: Third, launching a pilot program of voluntary settlement of foreign exchange capital for foreign-invested enterprises. The payment-based foreign exchange settlement system is currently applicable to foreign-invested enterprises, that is, foreign-invested enterprises can settle foreign exchange to make payments so that their demand to use foreign exchange is satisfied and speculative capital conversions are prevented. However, this policy restricts companies from independently using their settled foreign exchange capital, and, in particular, it presents less risks of loss of exchange to companies as the RMB exchange rate continues to rise. Given the enhanced bidirectional fluctuations of the RMB exchange rate since the beginning of this year, the SAFE has introduced the voluntary settlement policy for foreign exchange capital and has launched a pilot program in seventeen national economic and financial reform and development pilot zones, including the China (Shanghai) Pilot Free Trade Zone, the Shenyang Economic Zone, and the Suzhou Industrial Park. This policy gives companies more freedom to settle foreign exchange, allowing them to choose the method and time of foreign exchange settlement after the inflow of foreign exchange capital. According to the policy, an unpaid foreign exchange settlement account can be opened to deposit the RMB obtained after the settlement so as to prevent the risk of abnormal capital inflows. Companies in the pilot regions have more conveniences in terms of settlement of foreign exchange capital and can freely exchange currencies. From a rational perspective based on the operations and production of the majority of companies, since the launch of the pilot program capital inflows have remained stable, without significant growth in the settlement of foreign exchange capital. [10:17]  

·                     [Wang Yungui]: Third, deepening the pilot program for centralized operations and management of the foreign exchange of MNCs to promote innovative development of foreign exchange administration [10:18]  

·                     [Wang Yungui]: Numerous MNCs have invested in companies in China and many Chinese companies have invested overseas to become MNCs; hence there has been a huge demand for capital transfers between parent companies and subsidiaries and among subsidiaries. Companies were traditionally restricted from transferring capital among themselves by the foreign exchange administration authorities in accordance with the regulatory requirements, making it impossible for MNCs in China to revitalize their members' internal capital using management resources and making it impossible for overseas Chinese MNCs to support their overseas operations using the capital of their domestic parent company and associated companies. The Regulations on the Centralized Operation and Management of MNCs' Foreign Exchange Capital, launched by the SAFE in April 2014, allows MNCs to build a capital pool for domestic primary accounts and a capital pool for international primary accounts, allows qualified MNCs in China to centralize the collection, payment, and netting of foreign exchange capital under trade in goods and trade in services, allows members of MNCs in China to centralize the transfer of external debt quotas and to conduct voluntary settlements of foreign exchange capital, and allows conglomerates to gather the capital of their domestic members to extend loans to their overseas investment companies. These measures have been applauded by both banks and companies. Some MNCs have saved hundreds of millions of US dollars in financial costs within one year alone and some MNCs have reduced nearly 90 percent of the volume of their annual settlements through netting, thus seeing an obvious acceleration of capital turnovers, and some MNCs have elevated their financial management centers in China to Asia-Pacific capital centers. As a result, China has consolidated and enhanced its regional advantages in terms of using foreign capital and is upgrading from a manufacturing and R&D center to a capital and wealth center. [10:19]  

·                     [Wang Yungui]: Fourth, facilitating financial institutions to move into the interbank foreign exchange market to promote the diversity of foreign exchange market players [10:20]  

·                     [Wang Yungui]:  In 1994 China established an interbank foreign exchange market in the Shanghai Foreign Exchange Trading Center for China's foreign exchange wholesale market. Since the launch of the RMB exchange rate formation mechanism reform in July 2005, the interbank foreign exchange market has developed rapidly, with positive progress made in terms of diversifying market players, improving market rules, solidifying the infrastructure, and promoting self-discipline in the market. On December 5, 2014, the Circular on Adjusting the Management Policy for Offering Financial Institutions More Conveniences to Access the Interbank Foreign Exchange Market was released by the SAFE to encourage further administrative streamlining and power delegation, to facilitate financial institutions’ access to the interbank foreign exchange market, and to continue to promote the building of a management framework of market self-discipline and government regulation. The highlights of this circular are as follows: canceling ex ante access permissions for financial institutions to enter the interbank foreign exchange market and allowing financial institutions, such as banks, security companies, insurance companies, and fund and financial companies, to access the market and conduct transactions of spot exchanges, forward exchanges, swap transactions, and options of RMB against foreign currencies, provided they have obtained spot foreign exchange settlement and sales qualifications from the SAFE and derivatives trading qualifications from the financial regulators, including the China Banking Regulatory Commission (CBRC), the China Securities Regulatory Commission (CSRC), and the China Insurance Regulatory Commission (CIRC); canceling ex ante permission for currency brokers to access the interbank foreign exchange market and allowing them RMB derivative trading against foreign currencies and foreign exchange trading, lending, borrowing, and other services, provided that they abide by the rules and regulations of the interbank foreign exchange market. This policy will come into force on January 1, 2015. [10:20]    

·                     [Wang Yungui]: Fifth, clamping down on illegal foreign exchange and keeping a close eye on abnormal foreign exchange capital flows [10:20]  

·                     [Wang Yungui]: Since the beginning of this year, the SAFE has further stepped up foreign exchange inspections and cracked down on illegal foreign exchange to safeguard the economic and financial security in China. First, conducting special inspections to prevent false entrept trade and forward foreign exchange settlements, given the abnormalities of false entrept trade arbitrage and forward foreign exchange settlements. From the beginning of the year to November, 1,710 cases of foreign exchange violations were investigated and dealt with, imposing and collecting administrative fines in the amount of RMB 400 million. Second, strengthening cross-departmental financial regulatory cooperation. The SAFE has worked with the Ministry of Public Security to crack down on foreign exchange illegalities, such as underground banks and foreign exchange margin trading. As of the end of October, twenty-seven illegal foreign exchange trading cases such as underground banks had been dealt with, involving RMB 65 billion. Third, intensifying the search for clues about foreign exchange violations using the mega data resources acquired by the SAFE to further enhance the accuracy of the crackdowns and the efficiency of the inspections.  From the beginning of the year to November, 538 cases were identified through mega data analysis, imposing fines in the amount of RMB 260 million, accounting for 32 percent of all cases and 65 percent of the total penalties. Fourth, promoting the building of a foreign exchange credit system and expanding the application of information on foreign exchange illegalities. The SAFE has signed an MOU with the Credit Center of the People's Bank of China (PBC), integrating information on foreign exchange illegalities of companies and public institutions into the PBC's credit system to step up efforts to increase the penalties. [10:21]  

·                     [Wang Yungui]: To sum up, the SAFE has vigorously promoted administrative streamlining and power delegation and has steadily implemented foreign exchange administration reform measures, thus playing a significant role in revitalizing the market, promoting the stable and balanced development of imports and exports, easing companies' difficulties in financing and reducing their financing costs, and preventing the risks of cross-border capital flows. [10:21]  

·                     [Wang Yungui]:Now we will take your questions.  Before asking your questions, please remember to tell us where you are from. [10:30]  

·                     [Wang Yungui]:We are very glad to have Mr. Xiao, Mr. Guo, and Mr. Zhang with us today, which is a good opportunity for you. Please focus your questions on policies and issues related to the current account, the capital account, and foreign exchange administration and inspections. [10:31]  

·                     [Wang Yungui]: Now please raise your questions. [10:31]  

·                     [South China Morning Post]: The ruble has recently slumped in the international market. Does the SAFE have any preventative measures and what are its responses? How do you regard the reasons behind this slump? [10:31]  

·                     [Wang Yungui]: China and Russia are close trade partners. We are watching for any sharp fluctuations in the exchange rate of the ruble. We hope that companies and institutions can rationally use forward and swap financial tools and avoid and lock up risks in Sino-Russian trade activities to promote the healthy development of Sino-Russian economic and trade relations. [10:35]    

·                     [Economic Daily]: You mentioned just now that companies encountered difficulties in financing and were looking for ways to reduce their financing costs. A report released on www.gov.cn yesterday said that we have provided entrusted loans for companies using foreign exchange reserves, and we have provided policy banks, large commercial banks, and small and medium banks with USD 384.8 billion in foreign exchange. I am wondering whether the money is being used as cross-border loans and whether there are special arrangements in terms of the direction of the investments, the interest rate, and the maturity. [10:48]  

·                     [Wang Yungui]: We have noted this report, but since your question is about foreign exchange reserves as entrusted loans, we have no more information to disclose here. Thank you. [10:49]  

·                     [people.com.cn]:China has witnessed historical records regarding import and export surpluses since the third quarter of this year. It is worth mentioning that Mainland exports to Hong Kong rose very rapidly and exports of precious metals climbed significantly between September and October, while during this period the surplus of foreign exchange under trade in goods settled and sold rose only slightly. What would you say about this? [11:16]  

·                     [Xiao Lihong]: We too have noted this. Let's first look at the figures. China's import and export aggregates rose by up to 11.4 percent and 8.4 percent respectively in  September and October. Mainland imports from and exports to Hong Kong, especially for the processing trade of gold and jewelry, increased significantly. China's exports of precious metals were up by more than 600 percent and 180 percent respectively in September and October, much faster than the 15 percent average growth during the first eight months of the year. Mainland exports of gold and jewelry to Hong Kong were up by more than 500 percent in September and 120 percent in October, both of which were very high. [11:16]  

·                     [Xiao Lihong]: What is the relationship between the significant growth in the export of gold and precious metals and China's capital flows and financing? We too are looking into this. But based on the following analysis we believe they are not highly relevant: [11:17]    

·                     [Xiao Lihong]: In aggregate, no capital flows have flooded in with the dramatic increase in the export of gold and jewelry in terms of China's trade balance structure and trade financing this year. First, China has witnessed more inflows than outflows of cross-border capital since the second quarter of this year, which is a major trend. Second, we have observed that foreign exchange settled and received under trade in goods was low, while foreign exchange purchased and paid was high, and, in particular, the balance of foreign exchange settled and sold under trade in goods in October was, for the first time since 2012, in deficit, which was USD 2.4 billion. Third, the balances of trade credit, trade financing, and domestic and international foreign exchange remittances and loans were all on a downward trend. Trade financing was down by USD 36.5 billion and domestic foreign exchange loans were down by USD 21.2 billion during the first three quarters and the figures for October were on the decline as well. Therefore, in aggregate the surge in the export of precious metals did not result in significant inflows of trade capital. [11:17]  

·                     [Xiao Lihong]: At the micro level, Shenzhen represented the fastest growing region for the export and import of gold and jewelry to and from Hong Kong in terms of companies' receipts and payments of foreign exchange. The SAFE's Shenzhen Branch conducted a survey of one dozen gold companies with the fastest growth of imports and exports in September and October. This survey shows that their total receipts and payments of foreign exchange were on the decline during these two months, with their trade financing ratio lower than the local average. Therefore, the volume of companies' imports and exports of gold are not closely related to their capital flows. [11:17]  

·                     [Xiao Lihong]: Last but not least, policies and regulations. At the end of December 2013 the SAFE released Circular No. 44 to intensify verifications of trade financing. The SAFE and its branches have been committed to clamping down on trade structuring without a real transaction background and has never slackened in these efforts. In implementing Circular No. 44, commercial banks have enhanced their control over trade financing risks, and overseas banks, especially those based in Hong Kong, have not loosened their restrictions on trade financing by Mainland companies. There is limited room for financing arbitrage of trade structuring. [11:18]  

·                     [Xiao Lihong]:Trade structuring has not yet returned, and the SAFE will continue to watch out for industries with abnormal imports and exports and companies' cross-border receipts and payments, foreign exchange settlements and sales, and trade financing to guard against the risks of cross-border capital flows [11:18]  

·                     [CCTV]: You have briefed us on the policy of the pilot reform of centralized operations of MNCs’ foreign exchange. How will this policy support the state's plans for economic and financial reforms? Will more measures be introduced in the future to facilitate companies' cross-border investments and financing? [11:51]  

·                     [Wang Yungui]: The MNC policy is a key reform measure promoted by the SAFE this year. The reform measure for MNCs includes a package of policies covering many comprehensive businesses of the SAFE. These policies aim to facilitate Chinese and foreign-invested MNCs to use their internal funds rationally.     

·                     [Wang Yungui]:This policy has proved to be helpful to address the difficulties faced by companies in terms of financing and to reduce their high financing costs, which have been rather difficult this year. The SAFE has actively implemented the plans of the CPC Central Committee and the State and has been dedicated to addressing this issue. The MNC policy has an important institutional design that allows each company to open a domestic primary account and an international primary account. The capital pool of the domestic primary account allows domestic member companies of an MNC to put their capital into the same pool, which means that company A can lend its money to company B when it has money and companies A and B can lend their money to company C. This is very helpful for MNCs to revitalize their internal capital. In particular, this policy allows Chinese companies that have gone global to put together the capital of the parent company and that of the domestic subsidiaries and to lend it to their overseas subsidiaries and branches. [11:51]  

·                     [Wang Yungui]: We all know that many going-global companies cannot get loans from local banks or they have to pay a high price for loans. Meanwhile, many domestic large groups have a huge amount of internal capital. This policy allows domestic groups to integrate and transfer domestic funds to support the development of overseas companies. It has proved to be very effective in serving the going-global companies, especially those making overseas investments in areas not reached by Chinese financial institutions. [11:52]  

·                     [Wang Yungui]: Next, we will continue to step up efforts to reform policies for MNCs to facilitate better coordination of their capital and to build a more convenient financing environment. [11:52]  

·                     [Xinhua News Agency]: Next year will be the last year of the Twelfth Five-year Plan period. Does the SAFE have any plans for capital account reform and what measures will it introduce next year? [12:13]  

·                     [Guo Song]: The SAFE has adopted a series of measures to streamline administration and delegate power during the Twelfth Five-year Plan period, based on the uniform arrangements of the CPC Central Committee and the State Council as well as the principles of the "five shifts." In addition to the many reform measures we have taken since the beginning of this year, as briefed by Mr. Wang, over the past few years we have been committed to deepening the reform of the foreign exchange administration system and substantially improving capital account convertibility. During the past five years, we have been stressing the "five shifts.”  Now I would like to tell you about the "five shifts." [12:14]  

·                     [Guo Song]: To put it simply, the "five shifts" include a shift from focusing on approvals to stressing monitoring, and a shift from ex ante approvals to ex post regulation. Many items that were subject to ex ante approvals have been removed, and our monitoring and analysis capabilities are improving, which is the shift from approvals to monitoring. For example, external guarantees for the capital account used to require ex ante approvals, but, with the exception of one registration procedure, this approval has now been removed. This is the shift from ex ante approvals to ex post regulation. [12:14]  

·                     [Guo Song]: The shift from behavioral regulation to regulation of market players is also included. What is behavioral regulation? For example, external debts were subject to approvals of the external debt, and investment was subject to investment approvals. Now they are combined and subject to regulation by market players. The MNC management policy introduced by Mr. Wang is designed according to this logic. [12:14]    

·                     [Guo Song]: Of the remaining two shifts, one is the shift from presumption of guilt to presumption of innocence. The reforms of trade in goods and trade in services are cases in point. We used to presume everyone was guilty and therefore required case-by-case inspections, but now we presume everyone is innocent and we identify who is guilty through analysis and monitoring and we classify them as class-B or class-C companies that require strengthened regulation. This is the shift from presumption of guilt to presumption of innocence. [12:15]  

·                     [Guo Song]: Another shift is the shift from a positive list to a negative list. The concept of a negative list may be very familiar to you since the establishment of the China (Shanghai) Pilot Free Trade Zone. In fact, this concept was first put forward five years ago. [12:15]  

·                     [Guo Song]: There is still a long way to go, to be sure. It is assessed that the capital account now has forty sub-items. Our self-assessment shows that about 85 percent, or thirty-four sub-items, are convertible, or 85 percent of the capital account business can be handled now. This means that significant progress has been achieved in capital account convertibility over the past few years. [12:15]  

·                     [Guo Song]: Based on the spirit of the Third Plenary Session of the Eighteenth CPC Central Committee and the Central Economic Work Conference, the SAFE will build and improve the external debt and capital flow management system under a macro-prudential framework, and will deepen reforms in key areas, such as direct investments and securities investments, to further promote the opening up of the capital market. The SAFE will also systematically comb through the experience from the pilot program of centralized operations and management of the MNCs' foreign exchange and the foreign exchange administration policies of the China (Shanghai) Pilot Free Trade Zone and roll out the experience nationwide to gradually achieve convertibility of the RMB capital account. A series of reform measures for administration of foreign exchange under the capital account will be launched in the foreseeable future. Thank you. [12:16]  

·                     [China News Service]: You said just now that RMB 65 billion was involved in the underground banks that were destroyed from the beginning of the year to October. But I remember that RMB 2.8 billion was involved in the underground banks destroyed as of this August. Is the large gap because of special inspections or because of the crackdown on major cases?    

·                     [Zhang Shenghui]:Clamping down on underground banks has been one of our work priorities. This effort has focused on three aspects this year: first, exploring clues; second, close cooperation; third, extending inspections. [12:43]  

·                     [Zhang Shenghui]: First, just as Mr. Wang said just now, the SAFE has massive data and an offsite inspection system, through which we can analyze the foreign exchange receipts and payments and related behavior, identify abnormalities of capital flows, and find clues about cases. The offsite inspections have helped us find numerous clues, following which we have stepped up our efforts to crack down on the underground banks. [12:44]  

·                     [Zhang Shenghui]: Second, in terms of cross-departmental cooperation, we have been working closely with the Customs, the SAT, and the discipline inspection commission and the supervision department and we have shared information and resources about the cases. We also cooperate with the public security departments and take joint actions. [12:44]  

·                     [Zhang Shenghui]: Third, regarding extending the inspections, we investigate the counterparties and downstream and upstream clues every time we destroy an underground bank, identify upstream and downstream problems, and cooperate with the Customs, the SAT, and the discipline inspection commission to crack down on foreign exchange fraud and arbitrage, smuggling, and anti-corruption. [12:44]  

·                     [Zhang Shenghui]: Our efforts in these three aspects have proven to be effective this year. As of this October, the SAFE and the public security authorities cracked twenty-seven cases of underground banks and other illegalities, which involved a total of RMB 65 billion, with RMB 150 million frozen and more than RMB 30 million collected on site, and we caught more than ninety suspects. [12:44]  

·                     [Zhang Shenghui]: The rise from more than RMB 2 billion to RMB 65 billion as you have just mentioned was the result of several cases that involved a large amount of money. The time of the investigations varies with the complexity of the cases. It usually takes us several months, or half a year or even longer, to investigate each case. That's why the figures fluctuate. [12:45]  

·                     [Zhang Shenghui]: We will continue to step up our efforts to crack down on the underground banks and try to improve the effectiveness of our efforts to safeguard our foreign-related economic and financial security. [12:45]  

·                     [Reuters]: Will the recent pressures of capital outflows put downward pressures on the RMB exchange rate? [12:56]  

·                     [Wang Yungui]: There has been a new normal in the RMB exchange rate since the beginning of this year, namely, bidirectional fluctuations. This trend has been particularly obvious since the second quarter, with ups and downs in the RMB exchange rate. In this new normal, companies, institutions, and individuals have been more sensible. Rather than settling foreign exchange immediately after capital inflows, some companies deposit their export income overseas instead of transferring it to China and choose not to settle all the export income but rather to deposit it in their foreign exchange accounts. It is therefore normal that there are capital outflows during some months. This is a normal state under the new landscape of economic and financial liberalization and there is no need to worry about it too much. The SAFE will continue to enhance its regulation of foreign exchange capital flows. [12:56]  

·                     [Phoenix Satellite TV]: I am concerned about the collapse of the ruble. Some believe that the plunge of the ruble may lead to a depreciation of currencies and capital outflows of other emerging countries. Is the SAFE similarly concerned about the RMB? Will the RMB come under more pressure as the Fed increases the interest rate next year? [13:06]  

·                     [Wang Yungui]: There are very complex reasons behind the collapse of the ruble, which has attracted wide concern in the international community. As a large and open economy, China is also paying attention to this and the SAFE is continually monitoring and managing the flow of foreign currencies. Overall, the impact of the collapse of the ruble has not yet become fully apparent and still requires further assessment. [13:07]  

·                     [Global Times]: I am also concerned about the RMB depreciation. It has been recently expected that the volatility range of the RMB mid-rate will be further extended next year. What do you have to say about this? [13:17]  

·                     [Wang Yungui]: A RMB depreciation or appreciation is normal under the prerequisite of the market determining the RMB exchange rate. In this context, it is normal that the RMB depreciates at certain times or in a month, and it is therefore unnecessary to overanalyze it. [13:18]  

·                     [Wang Yungui]: Regarding the mid-rate, the People's Bank of China and the SAFE will continue to promote the marketization reform of the RMB exchange rate formation mechanism. Based on the spirit of the Third Plenary Session of the Eighteenth CPC Central Committee, the SAFE will allow the market to play a more decisive role in the RMB exchange rate formation mechanism, enhance monitoring of cross-border capital flows, and vigorously develop the foreign exchange market to gradually achieve a basic equilibrium in the balance of payments and will create a favorable environment for the development of China's foreign-related economy and finance. Thank you. [13:21]  

·                     [Wang Yungui]: Thank you for coming. You have raised very good questions, which will further enlighten us to accelerate trade and investment facilitation and to promote reform of foreign exchange administration to better serve the real economy. Thank you for your attention and support for our work. We are looking forward to meeting you again at our next press conference. [13:22]  

(The original text is available at www.people.com.cn)