The State Administration of Foreign Exchange (SAFE) has recently disseminated the data on banks' sales and settlements of foreign exchange and their foreign-related receipts and payments for customers for January 2017. The SAFE press spokesperson answered media questions on relevant issues to make further clarification.

Q: Could you brief us on the new changes in China's cross-border capital flows since the beginning of the year 2017.

A: Since the beginning of 2017, the pressure from cross-border capital outflows facing China has been relieved remarkably. First, the deficit in banks' sales and settlements of foreign exchange has contracted. In January 2017, a deficit of USD 19.2 billion was registered under banks' sales and settlements of foreign exchange, down by 59% month on month and 65% year on year. In particular, a deficit of USD 15.6 billion was recorded under sales and settlements of foreign exchange in the non-banking sector such as enterprises and individuals, down by 64% month on month and 77% year on year. Second, a declining deficit was recorded under foreign-related receipts and payments in the non-banking sector. In January, the non-banking sector posted a deficit of USD 9.7 billion under foreign-related receipts and payments, down by 21% month on month and 83% year on year. To be specific, a surplus of USD 1.7 billion in foreign exchange receipts and payments, and a deficit of USD 11.4 billion in RMB receipts and payments were posted.

The recent positive changes in the supply and demand of foreign exchange in China are multifaceted. First, market participants prefer settling foreign exchange to buying foreign exchange. In January, the ratio of customers' foreign exchange settlements with banks to the banks' foreign-related foreign exchange receipts was 62%, up by 4 percentage points month on month, while the ratio of customers' foreign exchange purchases with banks to the banks' foreign-related foreign exchange payments was 71%, down by 3 percentage points. Second, enterprises' cross-border foreign exchange financing has risen stably, and their repayment of domestic foreign exchange loans has dropped further. In January, the balance of cross-border financing for imports such as refinancing and forward L/C went up by USD 4.1 billion month on month, marking growth for the 11^th consecutive month; enterprises' purchases of foreign exchange to service domestic foreign exchange loans had hit rock bottom since March 2013, down by 45% month on month. Last but not least, domestic players' demand for purchasing foreign exchange has been further stabilized. In January, for example, enterprises' purchases of foreign exchange with ODI funds dropped by 8% month on month, and with ROI, by 20% month on month; and individuals' purchases of foreign exchange under travel for trips and study abroad fell by 28% month on month.

China's overall cross-border capital flows are presenting a more remarkable feature of reaching an equilibrium. Despite the many uncertainties in the external environments that are easy to trigger short-term fluctuations in global financial markets, China's middle and long-term development trends of cross-border capital flows will remain unchanged, with the economic fundamentals still serving as the fundamental support. Since the beginning of 2017, China's economy has continued to operate within a reasonable range. In January, the official manufacturing PMI remained above the boom and bust line for the 6^th consecutive month, and PPI rose positively for the 5^th consecutive month. Moreover, China's import and export of goods secured rapid year-on-year growth.