The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' foreign exchange settlement and sales as well as their foreign-related receipts and payments for customers for October 2019. The SAFE spokesperson and Chief Economist Wang Chunying answered media questions on foreign exchange receipts and payments for October 2019.
Q: What changes occurred in China¡¯s foreign exchange receipts and payments in October 2019?
A: In October, the supply and demand of China¡¯s foreign exchange market maintained a basic equilibrium, and the cross-border capital flows remained stable. First, foreign exchange settlement and sales by banks were in an equilibrium. A deficit of USD 4.4 billion was recorded in October, lower than the average of the first 9 months. If other supply and demand factors e.g. forward transactions and options transactions were considered, China's foreign exchange market was in balance in October. Second, foreign-related receipts and payments by banks for their customers represented a surplus. In the month, the non-banking sector, including companies and individuals, registered a surplus of USD 10.9 billion in foreign-related receipts and payments, versus a slight deficit in March to September. Third, the balance of foreign exchange reserves climbed, hitting USD 3,105.2 billion at the end of October, an increase of USD 12.7 billion month on month.
Market expectations of foreign exchange stayed stable and cross-border capital flows through major channels increased while maintaining stability. On the one hand, foreign exchange supply through major channels of inflows rose steadily. For example, the surpluses in cross-border receipts and payments and foreign exchange settlement and sales under trade in goods climbed both month-on-month and year-on-year; cross-border capital inflows from FDI and securities investment continued growing on a year-on-year basis. On the other hand, foreign exchange demand through major channels of outflows remained stable. For example, cross-border payments and purchases of foreign exchange under trade in services declined steadily, representing 6% and 14% year-on-year respectively in October due to lower payments for individual trips and for purchases of foreign exchange; cross-border capital outflows and purchases of foreign exchange under ODI remained stable.
Despite the complex and challenging external environment, China's economy shows great resilience, potential and vibrancy. The economic performance remains within a reasonable range and the high-level opening up is advanced, laying a solid foundation for the stability of the foreign exchange market. Further, market players are rational and maintain a good order in carrying out foreign exchange transactions, suggesting China's foreign exchange market is maturing, which is favorable for a continued equilibrium in the supply and demand of foreign exchange.