Q: The latest data disseminated by the People's Bank of China on foreign exchange reserves show that China's foreign exchange reserves as at the end of June 2018 rose USD 1.5 billion month on month. Could you tell us why such a change occurred? What would you say about the future trends of foreign exchange reserves?

A: As at the end of June 2018, China's foreign exchange reserves recorded USD 3.1121 trillion, up by USD 1.5 billion or 0.05% month on month.

In June China's foreign exchange market performed stably and the balance of payments found an adaptive equilibrium. But global financial markets were more volatile and the US Dollar Index picked up by a slight 0.5% because major non-USD currencies declined against the US dollars and asset prices changed. As a result, China's foreign exchange reserves climbed marginally.

In the year to date, China's economy has maintained stability while ensuring progress and gained momentum for growth. But due to divergence of the global economic recovery and rising trade frictions, some emerging economies have been under the pressure of capital outflows and currency depreciation. Nevertheless, in China, market expectations have been stabilized thanks to the robust fundamentals, and cross-border capital flows have remained steady.

Looking ahead, China will focus on the supply-side structural reform, deepening the reform and opening up and strengthening innovation drive, indicating China's economy is sophisticated enough to maintain stable growth, which will provide a fundamental guarantee for the stable operation of the foreign exchange market. On the other hand, as trade protectionism rises, the FED continues to hike interest rates and reduce balance sheets, and global liquidity is tightened, the uncertainties of external environment have been heightened. Under such factors at home and abroad, China's foreign exchange reserves are expected to stay stable amid fluctuations.