The State Administration of Foreign Exchange (SAFE) has recently disseminated China’s external debt data as at the end of June 2018, and an official from the SAFE answered media questions on recent situations of China’s external debt.

Q: Could you brief us on China's external debt for the second quarter of 2018?

A: China's external debt continued to grow in the second quarter of 2018. As at the end of June 2018, China's full-scale outstanding external debt registered USD 1.8705 trillion (in both domestic and foreign currencies), up by USD 27 billion or 1.5% quarter on quarter, primarily driven by the fact that overseas non-resident institutions continued to increase holdings of domestic RMB bonds.

Q: What would you say about China’s external debt situations?

A: Overall, China's external debt for the second quarter was steadily rising, and its structure was further optimized. First, as the domestic bond market has been further liberalized, the demand of foreign institutional investors to allocate China's domestic RMB bonds, especially medium - and long-term treasury bonds, continues to increase. According to relevant statistics, by the end of June 2018, the proportion of foreign institutions in China's treasury bond market had reached 7.28%, up by 2.31 percentage points so far this year, reaching a record high. Second, more than 70% of China's full-scale outstanding external debt increase for the second quarter was driven by medium - and long-term external debt, and the structure of external debt has been further optimized. By the end of June 2018, the ratio of China's short-term external debt to foreign exchange reserves was 38%, far below the international warning line.

Looking ahead, uncertainties and destabilizing factors in the international financial and economic environment are obviously on the rise. However, with the constant transformation of old and new drivers of growth, China's economy will maintain the fundamentals of resilience, adaptability and ample room for maneuver, which will help promote the basic equilibrium of cross-border capital flows. The SAFE will continue to pay close attention to the changes in the international and domestic situations, constantly improve the management system of external debt and capital flow under the framework of macro-prudential management, and attach equal importance to serving the real economy and preventing financial risks, so as to promote sustainable and sound economic development.