The State Administration of Foreign Exchange (SAFE) has recently released the data on external debt as at the end of September 2019. The SAFE spokesperson and Chief Economist Wang Chunying answered media questions on China’s recent external debt situations.

Q: Could you brief us on China's external debt for the third quarter of 2019?

A: China's external debt increased in the third quarter of 2019. As at the end of September, the full-scale outstanding external debt (including domestic and foreign currencies) hit USD 2.0325 trillion, up by USD 34.5 billion or 1.7% quarter on quarter.

The external debt structure was further optimized. The domestic currency denominated and mid and long-term external debt increased steadily. By the end of September 2019, the external debt denominated in domestic currency accounted for 34% of the full-scale outstanding external debt, and mid and long-term external debt claimed 41%, up by 3 and 6 percentage points from the end of 2017 respectively. Driven by the increase in domestic currency denominated and mid and long-term external debt, especially debt securities as risk-sharing capital inflows, the external debt structure maintained stability.

The external debt risk indicators remained robust. As far as the annual debt is concerned, China was ranked No. 13 worldwide by outstanding external debt as at the end of 2018. In comparison, those of the US, the UK and Japan were 10, 4, and 2 times as much as ours, respectively. As at the end of 2018, the external debt ratio was 14% (i.e., the ratio of the outstanding external debt to GDP, vs. internationally accepted safe level of 20%), the debt ratio was 74% (i.e., the ratio of outstanding external debt to export revenue, vs. internationally accepted safe level of 100%), and the debt servicing ratio was 5.5% (i.e., the ratio of payments of principal and interest on external debt to export revenue, vs. internationally accepted safe level of 20%), and the ratio of short-term external debt to foreign exchange reserves was 41% (vs. internationally accepted safe level of 100%). These indicators are expected to remain little changed within the internationally accepted ranges by the end of 2019, staying well below the overall levels of advanced and emerging economies.

In the year to date, facing the much intensified risks in and outside China, China, however, has continued to witness sound economic fundamentals, which will remain sound over the long term, with the balance of payments in a basic equilibrium and external debt structure further optimized. Going forward, the SAFE will deepen reform and opening up further in foreign exchange administration and refine the two-faceted administration framework of "macro prudence + micro regulation" for the foreign exchange market to guard against risks arising from cross-border capital flows and safeguard China's economic and financial security.