As shown in the statistics of the State Administration of ForeignExchange (SAFE), in May 2020, the amount of foreign exchange settlement andsales by banks was RMB 1079.6 billion and RMB 910.3 billion, respectively, witha settlement of RMB 169.3 billion. In the US dollar terms，the amount of foreignexchange settlement and sales by banks was USD 152.1 billion and USD 128.2billion, respectively, with a settlement of USD 23.8 billion. In particular,the amount of foreign exchange settlement and sales by banks for customers wasRMB 977.0 billion and RMB 834.1 billion, respectively, with a settlement of RMB142.9 billion; the amount of foreign exchange settlement and sales for banksthemselves was RMB 102.6 billion and RMB 76.2 billion, respectively, with a settlementof RMB 26.4 billion. During the period, newly signed contract amount of forwardforeign exchange settlement and sales was RMB 125.8 billion and RMB 71.7 billion,respectively, with a net newly signed contract amount of forward foreign exchangesettlement of RMB 54.1 billion. At the end of May, outstanding amount of forwardforeign exchange settlement and sales by the end of the current period was RMB 611.5billion and RMB 485 billion, respectively, with a net outstanding amount of forwardforeign exchange settlement of RMB 126.5 billion; the net Delta exposure ofoutstanding options was RMB -305.3 billion.

During January to May 2020, the accumulative amount of foreignexchange settlement and sales by banks was RMB 5620.9 billion and RMB 5073.9billion, with an accumulative settlement of RMB 547.0 billion. In the US dollarterms, the accumulative amount of foreign exchange settlement and sales bybanks was USD 800.8 billion and USD 723.1 billion, with an accumulativesettlement of USD 77.7 billion. In particular, the accumulative amount offoreign exchange settlement and sales by banks for customers was RMB 4738.5billion and RMB 4367.5 billion, respectively, with an accumulative settlementof RMB 371.0 billion; the accumulative amount of foreign exchange settlementand sales for banks themselves was RMB 882.3 billion and RMB 706.4 billion,respectively, with an accumulative settlement of RMB 176.0 billion. During theperiod, newly signed contract amount of forward foreign exchange settlement andsales was RMB 699.7billion and RMB 327.5 billion, respectively, with a net newlysigned contract amount of forward foreign exchange settlement of RMB 372.2 billion.

In May 2020, the amount of cross-border receipts and payments by non-bankingsectors was RMB 2170.4 billion and RMB 2129.8 billion, respectively, with a surplusof RMB 40.7 billion.During January to May 2020, the accumulative amount of cross-borderreceipts and payments by non-banking sectors was RMB 10794.2 billion and RMB 10935.1billion, respectively, with an accumulative deficit of RMB 140.8 billion.

In the US dollar terms, in May 2020, the amount of cross-border receiptsand payments by non-banking sectors was USD 305.7 billion and USD 300.0 billion,respectively, with a surplus of USD 5.7 billion.During January to May 2020, theaccumulative amount of cross-border receipts and payments by non-banking sectorswas USD 1537.8 billion and USD 1557.8 billion, respectively, with an accumulativedeficit of USD 20.1 billion.

Addendum: Glossaryand relevant definitions

Balance of payments(BOP) refers to all economic transactionsbetween residents and non-residents.

Foreignexchange settlement and sales by banks refers to settlement and sale transaction that bank executes for customers andfor the banks themselves, including statistic data onsettlements of forward contracts for foreign exchange settlementand sales and the exercises of option, and excludingthe transactions in the interbank foreign exchange market. The statistic reporting date of Foreign exchangesettlement and sales by banks should be the trade day of theForeignexchange settlement and sales transaction. By definition, foreignexchange settlement means foreign exchange holders sell foreignexchange to designated foreign exchange bank, and foreignexchange sales means designated bank sells foreign exchange to foreign exchange buyers. The net position of foreign exchange settlement andforeign exchange sales could be position squared throughtransactions on the inter-bank foreign exchange market, and it is one ofthe major contributors to the country’sforeign exchange reserve fluctuation, though it is not equal to netchange in foreign exchange reserves during the same period

Unlikethe principle of balance-of-payments statistics, which cover the transactionsbetween residents and non-residents, foreign exchange settlement and sales bybanks only cover transactions of RMB and foreign currencies between banks and customers or on banks for themselves.

Thenewly signed contract amount of forward foreign exchange settlement and sales refers to the binding forward contract between designated foreignexchange bank and client that predetermines foreign exchange currency, amount,exchange rate and tenor which to be executed upon maturity. Thenewly signed forward contract enables corporate to lock inadvance the exchange rate for the purchase or sale of a currency on a futuredate to manage relevant foreign exchange risk arising fromRMB volatility. In general, bank will hedge its foreign exchange risk exposures arise from the newly signed forward contract in the Interbank foreign exchange market. For example,when bank has net foreign exchange long position, bankwill short the equivalent amount of foreign exchange in the Interbank foreignexchange market in advance, or vice versa. Therefore, the newly signedcontract amount of forward foreign exchange settlement and sales is also one of contributors to China’s foreign exchange reserve fluctuation.

Theunwind amount of forward foreign exchange settlement and sales refers to, where client is unable to perform the original forwardcontract due to change in its real demand, client to fully or partially closeits forward position by executing another deal with opposite direction to theoriginal contract.

Therolling amount of forward foreign exchange settlement and sales refers to client to adjust the settlement date of original contract dueto change in its real demand.

Theoutstanding amount of forward foreign exchange settlement and sales by the endof the current period refers to the total amount of forwardcontracts accumulated from all non-matured forward contracts with client. Thenewly signed contractamount and the outstanding amount should satisfy the equationthat: theoutstanding amount of forward foreign exchange settlement and sales by the endof the current period = theoutstanding amount of forward foreign exchange settlement and sales at the endof the previous period + the newly signed contract amount of forward foreign exchangesettlement and sales for the period - settlements of forwardcontracts for foreign exchange settlement and sales for the period - the unwindamount of forward foreign exchange settlement and sales for the period.

The net Deltaexposure of outstanding options refers to the implied foreignexchange spot risk exposure from outstanding option contracts that bank executedwith client. Bank shall hedge such risk in the foreign exchange market for risk management during deal life cycle.

The cross-borderreceipts and payments bynon-banking sectors refers to the receipts andpayments between domestic non-banking sectors (including institutional and individual residents)and non-residentsthrough domestic banks, excluding receipts and payments in cash. In particular,the statisticsincludescross-border receipts and payments between non-banking sectors andnon-residents through domestic banks (including RMB and foreign currency), and domesticreceipts and payments between non-banking sectors and non-residents throughdomestic banks (temporarily excluding domestic receipts and payments in RMBbetween individual residents and non-resident individuals). Data are collected whencustomers conduct receipts and payments with non-resident counterparties atdomestic banks. Specifically, the receipts refer to the capitalof non-bankingsectors received fromnon-residents via domestic banks; the payments refer to the capitalof non-bankingsectors paid to non-residents via domestic banks.