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 January 2019. The SAFE spokesperson and Chief Economist Wang Chunying answered media questions on foreign exchange receipts and payments for January 2019.

Q: Could you brief us on China's foreign exchange receipts and payments for January?

A: Since the beginning of 2019, China's foreign exchange market has been running more smoothly. In January, banks' foreign exchange settlement and sales and foreign-related receipts and payments both showed a surplus. Based on relevant statistics, firstly, the balance of banks' foreign exchange settlement and sales turned from deficit to surplus. In January, banks' foreign exchange settlement increased by 9% on a month-on-month basis, while their foreign exchange sales fell by 2%, resulting in a surplus of USD 12.1 billion in foreign exchange settlement and sales. Secondly, the surplus of banks' foreign-related receipts and payments for customers was further expanded. In January, non-bank sectors such as enterprises and individuals registered a month-on-month increase of 6% in foreign-related receipts, and a decrease of 6% in foreign-related payments, resulting in a surplus of USD 41.3 billion, representing significant rise from a surplus of USD 300 million in December 2018. Thirdly, the balance of foreign exchange reserves continued to rise. Generally, the supply and demand of the domestic foreign exchange market remained basically balanced in January. The exchange rate of non-USD currencies rose against the US dollar, and the price of major financial assets increased to certain extent, which jointly boosted the balance of foreign exchange reserves of the month by USD 15.2 billion.

The foreign exchange market is expected to further improve, with positive changes witnessed in cross-border capital flows through major channels. Since the beginning of 2019, the willingness of market players to settle foreign exchange has increased, while their willingness to purchase foreign exchange has continued to decline. In January, the settlement rate that measures the willingness to settle foreign exchange, or the ratio of the foreign exchange sold by customers to banks to the customers' foreign-related foreign exchange receipts was 63%, up by 3 percentage points month on month. The selling rate that measures customers' willingness to buy foreign exchange, or the ratio of foreign exchange purchased by customers from banks to the customer's foreign-related foreign exchange payments was 64%, down by 1 percentage point from the previous month. Under such circumstances, the foreign exchange receipts and payments of main channels presented positive changes in January. First, the surplus in banks' foreign exchange settlement and sales under trade in goods for customers and the surplus in foreign-related foreign exchange receipts and payments increased by 96% and 2.9 times respectively on a month-on-month basis. Second, the foreign exchange settlement and sales under direct investment and foreign-related receipts and payments has maintained a big surplus. Third, foreign exchange settlement and sales under portfolio investment turned from deficit to surplus, and the surplus of foreign-related receipts and payments posted a month-on-month growth of 70%. Fourth, foreign exchange purchase by individuals maintained stable with a slight decline, down by 11% year on year. Fifth, the contracts for forward settlement and sales of foreign exchange maintained surplus for five consecutive months.

Since the beginning of this year, China's macro policies have intensified counter-cyclical adjustment and continued to pursue a proactive fiscal policy and a prudent monetary policy, which has further boosted market confidence and helped stabilize the foreign exchange market. Next, China will further advance the structural reform on the supply side, vigorously promote the all-around opening-up, keep the economy operating within a reasonable range, which is conducive to consolidating the foundation for stable operation of China's foreign exchange market.