— A Transcript
· [Wang Yungui]: Good morning, friends from the press. Welcome to today's press conference of the State Administration of Foreign Exchange, or the SAFE, on its policies for the fourth quarter of this year. I am Wang Yungui, director of the General Affairs Department. Today we have with us Wang Chunying, deputy director of the Department of Balance of Payments, Du Peng, director of the Current Account Management Department, Guo Song, director of the Capital Account Management Department, and Zhang Shenghui, director of the Management and Inspection Department. I am happy to see many familiar faces in the audience. We have discussed various problems many times together. [10:19]
· [Wang Yungui]: Since the beginning of the fourth quarter of this year, the SAFE has deepened the foreign exchange administration reforms under the guidance of the work plans by the CPC Central Committee and the State Council and boosted trade and investment facilitation in accordance with the requirements of the "five shifts". While promoting the foreign exchange administration reforms, the SAFE has strengthened monitoring early-warning and ongoing and ex-post management, thereby effectively guarding against and addressing cross-border capital flow risks and actively serving the sustainable and healthy development of the economy and society. [10:19]
· [Wang Yungui]: Now I would like to brief you on several key reformative measures adopted in the fourth quarter. [10:20]
· [Wang Yungui]: First, deepening the centralized operation of foreign exchange funds by MNCs. [10:20]
· [Wang Yungui]: In August, the SAFE further optimized the policy on centralized operation of foreign exchange funds by MNCs, offering convenience to more qualified companies, especially private companies, in optimizing the use of foreign exchange funds, while underscoring the importance of risk control. Specifically, the policy measures include simplifying the requirements for opening and using of foreign exchange accounts, and the procedures for receipts and payments of foreign exchange, and adopting self-discipline of the proportion of external debt borrowed by MNCs. So far, more than 50 MNCs have conducted self-disciplinary management of external debt proportion, and borrowed external debt of nearly USD 1 billion, effectively reducing the financing cost. This policy runs stably for the moment, with pilot companies' financing cost dropping remarkably and the efficiency of their use of funds rising significantly. Moreover, local governments' demand for developing the headquarters economy to promote structural transformation has been satisfied. What's more, banks swapped trade credit to large and medium companies for SMEs to benefit SMEs. As a result, these policies have been well-received among banks and companies. [10:21]
· [Wang Yungui]: Second, allowing franchise institutions to provide domestic and foreign currency exchange services for individuals through the internet. [10:21]
· [Wang Yungui]: The SAFE has always supported franchise institutions to innovate business in a good order. In September 2015, the SAFE issued an announcement, specifying that qualified franchise institutions can provide domestic and foreign currency exchange services for individuals through the internet. Domestic residents can place an order with a franchise institution for foreign currency banknotes or electronic traveler's checks through electronic channels such as the internet and mobile terminals and withdraw foreign currency banknotes or electronic traveler's checks at an offline outlet. By combining internet technologies with traditional domestic and foreign currency exchanges, this business can help reduce operating costs of franchise institutions, improve the service level of franchise business, provide more convenient exchange services for domestic residents and facilitate the development of "internet +". [10:21]
· [Wang Yungui]: Third, strengthening management of overseas withdrawals with UnionPay RMB cards. [10:22]
· [Wang Yungui]: Since 2003, the SAFE has been active in introducing policies to support cross-border use of bank cards including UnionPay RMB cards. But our monitoring showed abnormalities that some UnionPay cardholders withdrew a large sum of money too frequently overseas, which were reminded by overseas financial regulatory authorities, too. To guard against the money-laundering risk and safeguard the image of Chinese cardholders, the SAFE issued a notice to China UnionPay in September that China UnionPay should intensify management of overseas withdrawals of banknotes with UnionPay RMB cards. To be specific, China UnionPay should impose an annual limit on overseas withdrawals of banknotes with UnionPay RMB cards, in addition to the daily limit of RMB 10,000 or the equivalent per card. [10:22]
· [Wang Yungui]: Starting from January 1, 2016, the annual amount of money withdrawn per card should be no higher than RMB 100,000 or the equivalent. From October 1 to December 31, 2015, the cumulative amount of money withdrawn per card should be no higher than RMB 50,000 or the equivalent. The limit will be imposed by China UnionPay through technical means, without adding cost to the card issuing banks and cardholders. The limit is intended to contain large cash withdrawals by a limited number of persons and will not impact normal overseas withdrawals of the absolute majority of cardholders. Our monitoring showed that the withdrawals of October were down by 21% month on month, as compared with the monthly average of the first three quarters, suggesting the new policy has taken effect as expected while ensuring rational and normal use of cards by cardholders. [10:22]
· [Wang Yungui]: Fourth, the policy for Mainland-Hong Kong Mutual Fund Connect was officially launched. [10:22]
· [Wang Yungui]: In November 2015, the People's Bank of China and the SAFE jointly issued the Operating Guidance on the Management of Cross-border Issuance and Sales of Funds by Mainland and Hong Kong Securities Investment Funds, clarifying the quota management rules and relevant operations of the Mutual Fund Connect scheme to facilitate exchanges and inflows and outflows of funds involved in the cross-border issuance and sales by Mainland and Hong Kong funds. The Guidance is highlighted as follows: first, an aggregate quota control approach will be adopted in the Mainland-Hong Kong Mutual Fund Connect scheme, with the investment quota of RMB 300 billion or the equivalent imposed respectively for entry and exit in the early stage. Second, the SAFE will simplify the approval process by monitoring the use of aggregate quota, rather than approving the quota on a single institution or a single product. Third, no limitation will be imposed on the currencies for outward or inward remittances of funds under the cross-border issuance and sales and on the exchanges of funds within the quota. Fourth, institutions should make sure that the funds issued in other location by each fund should be no more than 50% of the total assets of the fund. Fifth, registration will be required for cross-border issuance and sales by funds, with the procedures to be gone through by their custodians or agents. Meanwhile, the SAFE should improve the approaches to collecting statistics on and monitoring the cross-border capital flows, and understand and control the use of aggregate quota through the registration of funds mutually connected. [10:23]
· [Wang Yungui]: The release of the Operating Guidance means the official implementation of the Mainland-Hong Kong Mutual Fund Connect policy, which opens new channels for securities investments by Mainland and HK investors and eliminates stringent limitations on "overseas issuance or sales by residents" and "domestic issuance or sales by non-residents" under "capital and monetary capital tools — securities for collective investments" in the capital and financial account transactions, a new breakthrough for the capital account convertibility. Fund managers in the Mainland and Hong Kong have lodged applications to China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong respectively and foreign exchange registration procedures can be gone through after they are registered. Relevant documents and systems of the SAFE are ready, too. [10:23]
· [Wang Yungui]: Fifth, continuing to improve quota management of qualified institutional investors. [10:23]
· [Wang Yungui]: In October 2015, the SAFE simplified quota management of QFII to provide more convenience to cross-border securities investments under the existing policy framework. First, the SAFE reformed the way of quota classification to unify quota management by adjusting the previous three types of quotas into quotas for open-end funds and quotas for other products or funds. Second, the SAFE simplified quota adjustment filing management by allowing voluntary adjustment of quotas for the same types of products and requiring ex-ante filing of the adjustments of quotas for open-end funds and for other products or funds. Third, the SAFE eased restrictions on the inward remittance period of the quotas for QFII, which can be extended to 6 months once at a time after filing. Fourth, the SAFE simplified the outward remittance procedures of principal by replacing approval with ex-ante filing. [10:23]
· [Wang Yungui]: Sixth, cracking down on activities against foreign exchange laws and regulations. [10:24]
· [Wang Yungui]: In the year-to-date, the SAFE has organized inspections of banks, financial leasing companies and rubber manufacturers, especially the major channels for abnormal cross-border capital flows, and stepped up efforts to crack down on behaviors against foreign exchange laws such as underground banks. Preliminary statistics show that more than 1,900 foreign exchange irregularities cases have been investigated and dealt with, with administrative fines of RMB 410 million imposed. First, the SAFE worked with the People's Bank of China, the Ministry of Public Security, the Supreme People's Court and the Supreme People's Procuratorate to crack down on the transfers of illegal income through offshore companies and underground banks, and has assisted public security authorities in solving more than 60 cases that involved illegal purchases and sales of foreign exchange through underground banks. The SAFE also has stepped up efforts to punish institutions and individuals that conducted transactions through underground banks in violation of relevant foreign exchange regulations. The SAFE has investigated and dealt with more than 100 such cases, imposing administrative fines of RMB 120 million. Second, the SAFE investigated banks for cross-border arbitrages and abnormal outflows. It organized foreign exchange compliance inspections of 7 banks with a large volume of cross-border receipts and payments, investigating more than 900 cases and imposing fines of over RMB 53 million. Third, the SAFE organized foreign exchange inspections of financial leasing companies. The SAFE inspected 160 financial leasing companies with large volumes of foreign exchange business, abnormal operations and many leads of irregularities, which involved cross-border receipts and payments of USD 15.45 billion, and found 19 companies suspected of irregularities and imposed fines of RMB 8.934 million on them. Fourth, the SAFE organized inspections of trade finance in the natural rubber industries. 14 typical companies were inspected and 7 were found to have violated foreign exchange regulations, with USD 130 million involved. Fifth, the SAFE worked with various departments to step up efforts to inspect evasion of large amounts of foreign exchange and illegal foreign exchange margin trading, thereby effectively safeguarding the foreign exchange market order. [10:24]
· [Wang Yungui]: Overall, the SAFE played its due role in foreign exchange administration during the fourth quarter of this year, focusing on boosting reforms and guarding against risks. Thanks to the SAFE's efforts, the foreign exchange reformative measures ran stably, giving decisive roles to the market and facilitating cross-border trading and investment activities of market players, while effectively guarding against cross-border capital flow risks and ensuring the basic equilibrium of the balance of payments. [10:24]
· [Wang Yungui]: Now please ask your questions on the policies unveiled just now. [10:25]
· [Economic Daily]: Mr. Wang said just now that the People's Bank of China and the SAFE recently introduced a series of policies to cope with cross-border capital flow risks, including imposing a limit on overseas withdrawals with UnionPay cards and collecting from commercial banks the risk reserves for forward sales of foreign exchange. What are the effects of these policies? Is it likely or do you have any plan to adjust these policies in the future? Thank you. [10:59]
· [Wang Chunying]: Compared with the third quarter, the supply and demand pressure does have relaxed since October, which, we believe, should be attributed to a combination of the policies, the market and seasonal factors. [10:59]
· [Wang Chunying]: First, the policies do have taken effect. Since mid-August, the People's Bank of China and the SAFE have introduced some policies. Without changing the basic landscape of the reform and opening up, these pertinent policies indeed have eased the pressure from cross-border capital outflows and stabilized expectations while containing speculations. [10:59]
· [Wang Chunying]: Second, compared with the third quarter, risk aversion in global financial markets has been weakened remarkably, and domestically, the economy has remained stable, the market sentiment has recovered and the willingness to buy foreign exchange has further declined among market players. Foreign exchange purchased by companies and individuals as a percentage of foreign-related foreign exchange payments by non-banking sectors, or the foreign exchange sales rate, was 76% in October, down by 25 percentage points from 101% in August and 14 percentage points from 90% in September. [11:00]
· [Wang Chunying]: Third, as for the seasonal factors, the demand for purchasing foreign exchange for overseas travel has been on the decline since October. [11:00]
· [Wang Chunying]: For the risk reserves for forward sales of foreign exchange to be collected from commercial banks, the People's Bank of China answered this question from a reporter on September 8, which is a macro-prudential management measure. Recent data show that contracts on forward sales of foreign exchange via banks of USD 78.9 billion were signed in August, 2.9 times the monthly average of January to July, but the amount dropped drastically to USD 17.6 billion and USD 5.3 billion in September and October. This remarkable difference shows that there were speculations in the market in the past, and macro-prudential management was effective, containing irrational and speculative behaviors in the market and helping the market return to rationality and get stabilized, which is favorable for guarding against macro financial risks and bolstering robust operations of financial institutions. Next, we will continue to observe the effects of the policies and the market. [11:03]
· [Wang Chunying]: I would like to say something more on limit on overseas withdrawals with UnionPay cards, which you also mentioned. Our monitoring shows that overseas withdrawals in October were down by 21% from the monthly average of the first three quarters, and the ratio of failed withdrawals to successful withdrawals due to the annual limit was 4.34:100. This low ratio suggests that the new policy has taken effect as expected while ensuring the normal and rational demand of cardholders. It is worth noting that the focus of this policy is to guard against money-laundering risks, and unlike macro-prudential management policies, this policy will remain unchanged. Next, the SAFE will continue to support normal cross-border payments with bank cards for travel consumption, facilitate international communication, and implement the policy regarding domestic purchases of foreign exchange to pay for overseas consumption, but will not encourage large-sum cross-border withdrawals by cardholders. [11:03]
· [CCTV-2]: My question is about how to promote two-way opening of the capital market, as is put forward in the Proposal of the 13th Five-Year Plan. I wonder what new policies or measures the SAFE will introduce to promote the two-way opening, such as changes or reforms of the domestic and overseas investment quotas. Thank you. [11:09]
· [Guo Song]: We have studied the Proposal of the 13th Five-Year Plan and understand the overall direction, as the Proposal clearly says that the target is to achieve the capital account convertibility in an orderly manner. Just now Mr. Wang briefed us on the reformative measures in respective of the capital market, such as the Mutual Fund Connect, and I would here like to explain why the Mutual Fund Connect is reformative. First, there is an overall limit on the size, which is similar with what we did in the past, but the quota for a single institution has been removed and the approval from the SAFE has been canceled, which is significant progress. What's more, the data reporting and the overall process have been simplified, which is progressive from the perspective of canceling administrative approval or liberalization. [11:09]
· [Guo Song]: We also introduced two other measures, which you might have ignored. One is the management measure for specific commodity futures trading, which refers to crude oil futures trading that might be launched in Shanghai in the near future. In designing this system, we took a step forward without imposing any quota or limiting the size of a foreign investor. In addition, we approved foreign investors to trade on two local carbon emissions exchanges this year and last year respectively, without imposing any quota. President Xi Jinping announced that we would establish a national carbon emissions exchange sometime in the future, but we have liberalized some local carbon emissions exchanges, making it easier to further liberalize this market in the future. [11:09]
· [Guo Song]: The other is what Mr. Wang just mentioned, the QFII reform. This reform does not involve quota management, but we have simplified the process, such as quota classification by adjusting three classes into two classes and changing approval of outward remittance of funds into ex-ante filing. These seemingly petty changes will offer great convenience to institutions. Previously, it might take half to one month to issue a document, but now it only takes about one week to make ex-ante filing. We have conceived of some future reforms and may press them forward during the 13th Five-Year Plan Period. These reforms may include the liberalization of quotas and the adjustment of the ceiling of the quota for a single institution, and I am sure such reforms will be launched soon. Thank you. [11:10]
· [Financial News]: I've learned that the monitoring system for individual foreign exchange business will be launched on January 1, 2016. I wonder what impact the system will have on purchasing and settling foreign exchange by residents. Will the annual USD 50,000 quota on foreign exchange settlement and sales be relaxed? Thank you. [11:32]
· [Du Peng]: Thank you for your questions and your attention to the individual foreign exchange business under the current account. We plan to launch a new monitoring system for the individual foreign exchange business on January 1, 2016. Compared with the existing system, this system has some changes as follows: [11:33]
· [Du Peng]: First, this system can effectively save banks from inputting for the second time and thus will greatly facilitate information inputting. Previously, much information was input manually. [11:33]
· [Du Peng]: The launch of the system will significantly simplify banks' work. [11:34]
· [Du Peng]: Second, while maintaining the function of collecting statistics on individual sales and settlement of foreign exchange, the new system will have functions of "foreign exchange receipts and payments" and "banknote deposits and withdrawals". This means that this system will collect and monitor all the data involved in individual foreign exchange business, including sales and settlement of foreign exchange, foreign-related receipts and payments, and deposits and withdrawals of banknotes. [11:35]
· [Du Peng]: Third, the new system underscores the management and offsite monitoring analysis of the watch list. In the past, such a watch list for individuals was made by a single bank based on the standards for split settlement and sales of foreign exchange issued by the SAFE, and not applicable to all banks across the country. After the launch of the new system, these data will be acquired, analyzed and disseminated nationwide by the SAFE in a centralized manner. In the future, when an individual go to a bank for sales and settlement of foreign exchange, the bank will be able to know whether this individual is on the watch list of other banks or other regions. [11:35]
· [Du Peng]: Fourth, the new system will run more stably. [11:36]
· [Du Peng]: Overall, the launch of the new system will offer more convenience for individuals and banks in relevant businesses, while the foreign exchange administration policies for individuals remain unchanged. [11:36]
· [Du Peng]: We are also monitoring and watching out for the adjustment of the USD 50,000 quota on individuals for the sales and settlement of foreign exchange. Our statistics show that more than 96% of foreign exchange purchases by individuals are within USD 50,000, and the amount of foreign exchange purchases per capita has been on the decline over the past two years, which justifies that the USD 50,000 quota is enough to satisfy individuals' demand for use of foreign exchange. On the other hand, there is actually no ceiling on the sale and settlement of foreign exchange in the amount more than USD 50,000: individuals are required to go through relevant procedures with a bank by presenting their ID cards if the amount is below USD 50,000; if the amount is higher than USD 50,000, individuals are also required to go through relevant procedures with a bank by presenting relevant authenticity evidencing materials with the transaction amount on them. In a word, individuals' demand for use of foreign exchange, if true, can be generally satisfied. Thank you. [11:36]
· [CBN Daily]: Mr. Wang said just now that the pressure from foreign exchange flows relaxed in October. But the foreign exchange reserves data for November released by the Central Bank recorded a significant negative growth. Will this be reflected on the foreign exchange data for November? Does the SAFE have any specific measures to ease the capital outflow pressure? Will there be a policy on the Tobin Tax previously mentioned? Thank you. [12:10]
· [Wang Yungui]: You have noticed the reserves data disseminated by the Central Bank and are concerned about what the fall of USD 87.2 billion in foreign exchange reserves mean. As the statistics on the foreign exchange sales and settlement for November are not fully available, we made a preliminary judgment and believe that there are several reasons behind the fall. First, the book losses incurred in the conversion from reserved non-USD currencies to the US dollar. Under the principles of security, flows and value maintenance and increase, the SAFE has been committed to pushing diversified operation of foreign exchange reserves in recent years. Under diversified operation, it is unlikely to reserve all our foreign exchange in the US dollar, but also in the euro, the pound sterling and the Japanese yen. As the US dollar strengthened, these currencies depreciated significantly against the US dollar in November. At the end of November, the euro against the US dollar dropped 4% month-on-month, the pound against the US dollar, 2.4%, and the Japanese yen against the US dollar, 2%, which led to book losses in dollar terms in the non-dollar reserve currencies. On the contrary, our reserve assets rose as the dollar depreciated in the past few years. Foreign exchange reserves will vary with the changes in other currencies to US dollar exchange rates. [12:11]
· [Wang Yungui]: Under the Belt and Road Initiative, the Chinese government has strengthened the policy support to projects going global since the beginning of this year. Foreign exchange reserves have been used to finance some "going global" projects. According to the definition of foreign exchange reserve by the IMF, such foreign exchange reserves will be adjusted out, which is normal. Based on our observations, a good result is that external assets held by society rise while a country's foreign exchange reserves fall. As the foreign exchange reserve assets held by the Central Bank decrease and move to society, they become external assets held by domestic enterprises, which is in line with China's national strategy and favorable for the smooth operation of the national "going global" strategy. [12:11]
· [Wang Yungui]: As the dollar strengthened recently, the yuan has become relatively weak. Some enterprises and institutions mitigated risks through hedging and buying more foreign exchange to pay debt or repay loans. Overall, these were all within tolerance of the foreign exchange administration policies. Since the current national strategic arrangements are to promote trade facilitation as well as investment facilitation, proper adjustments of foreign exchange reserves will be favorable for the national strategic layout, and we are glad to witness the transformation and adjustments of China's external economic structure. [12:12]
· [Wang Yungui]: As for Tobin tax, this is a very broad concept and is designed to slow down the turnover of cross-border capital flows primarily by levying tax or collecting fees. The risk reserve to be collected on forward sales of foreign exchange by banks starting from September is similar to the Tobin tax in a broad sense. Conceptually, the Tobin tax is in line with the overall reform direction that administrative and quantitative regulation will be reduced and price control will be intensified. Since the size and speed of cross-border capital flows are acceptable for the moment, the Tobin tax is just a research tool in the policy toolkits and no policy solution has been made available. Since the global financial crisis in 2008, the international community has studied the macro prudential policy tools, including Tobin tax, and China is following the international way to study relevant policy measures. [12:12]
· [21st Century Business Herald]: My question is about the balance of payments. The balance of payments has sustained a surplus for 6 consecutive quarters. What's your prejudgment of the future? Will this surplus put some pressure on the RMB in the short term? [12:29]
· [Wang Yungui]: Thank you for your attention to this issue. Over the past few years or the past few quarters, China's balance of payments has stayed robust. For example, the share of the current account surplus in GDP, a universal measurement of the robustness of the balance of payments, was 2.7% in China in the first three quarters, despite depreciation of the RMB and fluctuations of cross-border capital flows. This figure was within a reasonable range, as universally recognized. The basic parts of the balance of payments include trade in surplus and direct investments. Trade in surplus exceeded USD 500 billion in the first 11 months of this year, and China's use of foreign funds surpassed USD 100 billion in the first 10 months. [12:29]
· [Wang Yungui]: The most important measurement of exchange rate volatility as universally recognized is the balance of payments. Whatever projection is made, we will look at the structure of the balance of payments in the end. Overall, China's balance of payments remained robust this year, which is the foundation for the unlikelihood of substantial RMB depreciation. The Latin America's debt crisis or Asia's financial crisis in the last century was the result of the problematic structure of the balance of payments. Currently, China's balance of payments, either under trade or under capital and finance, is robust. Current account surplus and capital account deficit make a balanced structure. The robust balance of payments can shore up stable exchange rate in the long term. Thus far, we have not seen any depreciation of the exchange rate due to an unhealthy structure of the balance of payments. Any analysis should be made under the traditional balance of payments framework. [12:30]
· [China Daily]: What is the latest progress the SAFE has achieved in cracking down on underground banks? What adjustments would the SAFE make in the way of thinking in the crackdown in the future? Thank you. [12:30]
· [Zhang Shenghui]: Cracking down on underground banks has always been a priority of the SAFE, especially this year. Since April, the SAFE, the People's Bank of China, the Ministry of Public Security, the Supreme People's Procuratorate, and the Supreme People's Court have been cracking down on the transfers of illegal income through offshore accounts and underground banks. In this operation, the SAFE made full use of its advantages and worked closely with the departments, achieving significant progress in the crackdown on underground banks. Relevant figures have been released to the media recently by the Ministry of Security and the People's Bank of China. We concluded more than 60 foreign exchange cases including some specially important cases. Next, the SAFE will continue to maintain a tough stance on underground banks. At the end of this year and in 2016, these departments will continue to work together to intensify crackdown on financial and foreign exchange irregularities, such as underground banks, and transfers of illegal income through offshore accounts. Thank you. [12:31]
· [The Economic Observer]: What impact do the strong expectations of the Fed's interest rate hike in December and of the depreciation of the CNH recently have on China's cross-border capital flows? Is it true that China has temporarily suspended handling applications from institutions for RQDII? Thank you. [12:43]
· [Wang Yungui]: I will answer the first question and Mr. Guo will answer the second question. [12:43]
· [Wang Yungui]: The US interest rate hike has drawn global concern. The interest rate hike will have certain impact on the global cross-border capital flows, which is also an important issue in the economic and financial world today. We have underscored in the previous press conferences that the interest rate hike would impact China's cross-border capital flows to some extent, but not remarkably. Along with the interest rate hike, the dollar may appreciate, leading to the pressure of depreciation of other currencies against the dollar, including those of emerging countries like the yuan. Under this circumstance, some cross-border capital may flow in a bilateral way both at home and abroad, which is a rational choice of the market. [12:43]
· [Wang Yungui]: Overall, whether the Fed will increase the interest rates in December or not, that would be a gradual process. During this process, China's reform and opening up will go deeper. Meanwhile, its trade and investment competitiveness remain strong, and the current account surplus is huge, such as the trade surplus, which has exceeded USD 500 billion in the year-to-date. Therefore, the US interest rate hike will interrupt the short-term cross-border capital flows but in the long run, the balance of payments and cross-border capital flows will remain robust. What will impact the cross-border capital flows is China's reform and opening up. Along with the two-way opening of China's economy, Chinese enterprises' competitiveness will stand more tests of global markets and the structure of China's balance of payments is supposed to remain relatively stable in the long term. In a word, the US interest rate hike will have some, but not remarkable, impact on cross-border capital flows. [12:44]
· [Guo Song]: The SAFE has never released any document on RQDII, and please consult the department that released relevant documents for this issue. [12:44]
· [Economic Information Daily]: The yuan depreciation pressure has recently concerned the market. What are the monitoring results of cross-border capital flows since November, including recently? Are there any new findings? Thank you. [13:06]
· [Wang Chunying]: The data disseminated are those as of October and the November data are not fully available yet. Our monitoring shows that the pressure from supply and demand in the market is heavy, which is also shown in the movement of the foreign exchange rate. [13:06]
· [Wang Yungui]: Currently, there are many voices on the RMB exchange rate, and I would like to say something more: First, since November, the yuan has been depreciating against the US dollar, primarily because the US dollar appreciated against the pound sterling, the Japanese yen and the euro as it strengthened in the month. In fact, the yuan also appreciated against the euro and the Japanese yen in the month. Second, a rational approach should be adopted to look at the RMB exchange rate fluctuations. The People's Bank of China and the SAFE have conducted many reforms in the marketization of the RMB exchange rate in recent years, including the expansion of the fluctuation range of the RMB exchange rate and the improvement of the central parity rate formation regime. As a result, it is normal that the RMB exchange rate fluctuates in the process, which reflects the domestic supply and demand and the changes in global financial markets. Third, the market supply and demand and the balance of payments are the indicators of the fluctuations of the RMB exchange rate. For the moment, China's balance of payments is robust, with a trade surplus of more than USD 500 billion and FDI of over USD 100 billion throughout the year, which is the basis for our analysis. As was mentioned earlier, foreign exchange sales and settlement were much better in October than in the third quarter, with the deficit dropping to USD 20 billion in October from nearly USD110 billion in September. Moreover, China witnessed net inflows of foreign exchange in October, compared with net outflows of more than USD 70 billion of foreign exchange in September. Therefore, the fundamentals of China's economy and market are robust, and there are no grounds for the long-term depreciation of the RMB exchange rate. [13:07]
· [Wang Chunying]: As for the relation between pressure and exchange rate, I would like to share with you two observations: to observe the RMB exchange rate, we should not just look at the bilateral exchange rate of the yuan against the US dollar, but also the multilateral exchange rate and the mid and long-term movements. Of the 63 currencies monitored by the BIS, the RMB nominal and real effective exchange rates appreciated in the first ten months this year, while more than half of other currencies depreciated. The RMB fluctuation rate remains low now, but the market tolerance of the RMB exchange rate fluctuations is low too. As such, even a slight fluctuation of the RMB, such as weakening against the US dollar for a couple of days, would concern people about the depreciation of the RMB, which would have a certain impact on the market players' expectations of the RMB exchange rate and their transactions. [13:07]
· [Wang Chunying]: Therefore, we do not advise that the short-term fluctuations of the bilateral rate of the yuan against the dollar be regarded as the trendy appreciation or depreciation of the yuan. Instead, we suggest that more attention should be paid to the multilateral exchange rates of the yuan to a basket of currencies and the longer term trajectory. [13:08]
· [Wang Yungui]: Thank you for attending today's press conference and you are welcome to a foreign exchange data release press conference slated for the first quarter of next year. Thank you. [13:11]
(The original text is available at www.people.com.cn)
