Q: The foreign exchange reserves data recently disseminated by the People's Bank of China (PBC) show that China's foreign exchange reserves by the end of December 2016 dropped by USD 41.081 billion month-on-month, and the figure in 2016 fell by USD 319.844 billion year-on-year. Could you explain these declines in foreign exchange reserves?

A: As at December 31, 2016, China's foreign exchange reserves amounted to USD 3010.517 billion, down by USD 41.081 billion or 1.3% month-on-month.

The factors that influenced the changes in foreign exchange reserves mainly include: 1. the central bank's operation in the foreign exchange market; 2. Price fluctuations of investment assets in foreign exchange reserves; 3. As the US dollar is the measurement currency of foreign exchange reserves, the changes in foreign exchange rate of other currencies against the US dollar may lead to the changes in China's foreign exchange reserves; 4. according to the IMF definition, the foreign exchange reserves used to support "going global" will be recorded beyond rather than under foreign exchange reserves, and vice versa.

In December, the central bank provided foreign exchange to the market to rebalance the supply and demand of foreign exchange, respond to the depreciation of non-USD currencies against the US dollar, among others, and consequently resulted in the drops in foreign exchange reserves.

Throughout the year, the central bank's effort to stabilize the RMB exchange rate was the primary cause behind the decreases in foreign exchange reserves. When it comes to evaluation, the depreciation of non-USD currencies against the US dollar and the changes in asset prices also contributed to the declines. To sum up, the decreases in foreign exchange reserves for 2016 shrank by USD 192.812 billion year-on-year.