SCIO briefing on China's foreign exchange receipts and payments
Speaker:
Wang Chunying, spokeswoman of State Administration of Foreign Exchange
Chairperson:
Xi Yanchun, vice director-general of Press Bureau, State Council Information Office
Date:
Jan. 18, 2018
Wang Chunying (R), spokesperson of the State Administration of Foreign Exchange (SAFE), speaks at a press conference held by the State Council Information Office of China in Beijing, capital of China, Jan. 18, 2018. [Photo/Xinhua]
Xi Yanchun:
Ladies and gentlemen, good morning. Welcome to this press conference. Today, we are delighted to invite Ms. Wang Chunying, spokeswoman of the State Administration of Foreign Exchange, to introduce China's foreign exchange receipts and payments in 2017. She will also answer some of your questions.
Now, I'll give the floor to Ms. Wang.
Wang Chunying:
Good morning. Welcome to this press conference. I'll first introduce China's foreign exchange receipts and payments in 2017, and then answer some of your questions.
In 2017, amid moderate recovery of the world economy and steady performance of the global financial market, China achieved stronger momentum in its economic growth, with further progress in supply-side structural reform, improvement in the quality of economic development, and no major fluctuations in the RMB exchange rate index.
The State Administration of Foreign Exchange has paid equal emphasis on reform and risk prevention. We have worked hard to contribute to the country's reform and opening up efforts by improving cross-border trade and investment facilitation, promoting two-way openness of the financial market, and providing better services to the real economy. We have also strengthened our works in fending off risks in the cross-border financial flow, and cracking down on law-breaking activities involving foreign exchange, thus to safeguard the country's economic and financial safety.
Generally speaking, improvements were seen in cross-border financial flows, and overall balance was achieved between demand and supply in the foreign exchange market.
Last year, foreign currency bought and sold by Chinese banks totaled 11.0884 trillion yuan (US$1.6441 trillion) and 11.8532 trillion yuan (US$1.7557 trillion) respectively, creating a deficit of 764.8 billion yuan (US$111.6 billion).
Foreign-related receipts and payments by banks on behalf of clients were worth 20.2081 trillion yuan (US$2.9969 trillion) and 21.0561 trillion yuan (US$3.1213 trillion) respectively, with a deficit of 848.0 billion yuan (US$124.5 billion).
China's foreign exchange receipts and payments presented the following characteristics in 2017:
First, the deficit of foreign exchange settlement and sales by banks and that of foreign-related receipts and payments declined noticeably, and some months even came up with a surplus.
In 2017, in dollar terms, foreign exchange settlement by banks increased by 14 percent year-on-year, and foreign exchange sales by banks decreased by 1 percent year-on-year. The deficit of foreign exchange settlement and sales stood at US$111.6 billion, down 67 percent year-on-year, and significantly, there were a surplus of foreign exchange settlement and sales in September, October and December respectively.
Foreign-related receipts by banks on behalf of clients increased by 7 percent year-on-year, and foreign-related payments by banks on behalf of clients increased by 1 percent. The deficit of foreign-related receipts and payments by banks on behalf of clients stood at US$124.5 billion, down 59 percent year-on-year.
Second, the balance between supply and demand in the foreign exchange market tended to be more stable.
In terms of quarterly data, the deficits of foreign exchange settlement and sales by banks were US$40.9 billion and US$53.0 billion respectively in the first quarter and in the second quarter, and the figure declined to US$19 billion in the third quarter, and turned to a surplus of US$1.2 billion in the fourth quarter.
It is necessary to explain that foreign exchange settlement and sales by banks are the main factors affecting the supply and demand of foreign exchange in China, but not the only one. If comprehensive consideration is given to factors such as spot transactions, forward transactions, and options, the supply and demand of foreign exchange in China has turned to a state of basic balance since February 2017.
Third, the demand from market entities to purchase foreign currencies cooled down, and the financing of foreign exchange grew slightly from a sound basis.
The ratio between forex purchased by clients from banks and their overseas expenditures, a variable that gauges the demand of forex transactions, declined nine percentage points to 65 percent year on year. On a quarterly basis, the proportion was 68 percent, 67 percent, 63 percent and 62 percent respectively. These figures indicate the waning demand of enterprises in terms of forex financing and payback.
Meanwhile, the surplus of forex loans in the domestic market increased US$300 million in accumulation, a contrast to the cumulative decrease of US$85.8 billion by 2016. The outstanding loans in cross-border forex financing activities, such as overseas refinancing and the usance letter of credit, conducted by domestic import enterprises, rose to US$28.4 billion.
Fourth, the settlement of forex incomes from market participants showed signs of growth, and individual demand for foreign currencies abated.
In 2017, the ratio of forex settlement, a yardstick of market demand measured between foreign currencies sold by clients to banks and the forex incomes received by clients from overseas transactions, reached 63 percent, up three percentage points year on year. On a quarterly basis, the ratio was respectively 62 percent, 63 percent, 64 percent and 62 percent, showing the stable demand of market entities.
Besides, in 2017, personal forex deposits in China dropped by US$700 million in accumulation, while in 2016, it increased US$36.3 billion in accumulation.
Wang Chunying:
Fifth, the deficit of forward foreign exchange purchases and sales of banks generally decreased. In 2017, the contracted amount of forward foreign exchange purchases increased by 111 percent year-on-year, and that of forward foreign exchange sales rose 12 percent, recording a deficit of US$26 billion. This was 69 percent less than the figure in 2016. It shows that, in 2017, the expectations in regard to the RMB exchange rate were generally more stable.
Sixth, the foreign exchange reserves continued to rise. By the end of last December, China's foreign exchange reserves was US$3.14 trillion, or US$129.4 billion more than the end of 2016. Notably, from February to December, the reserves kept increasing for 11 consecutive months.
That is all I want to say in this briefing. Now, I'm glad to take your questions.
Xi Yanchun:
Thank you, Ms. Wang. Now the floor is open to you journalists. As usual, we kindly remind you to identify the media outlet you represent before asking your questions.
