Q: The State Administration of Foreign Exchange (SAFE) has just released the latest data on China's foreign exchange reserves. Could you explain why China's foreign exchange reserves changed in September 2020? What will be the future trends?
A: By the end of September 2020, China's foreign exchange reserves had recorded US$ 3.1426 trillion, down by US$ 22 billion or 0.7% month on month.
In September 2020, the supply and demand of China’s foreign exchange market maintained basic equilibrium, and the cross-border capital flow was generally stable. The US Dollar Index rose slightly and asset prices diverged on the international financial market, due to the repeated outbreak of COVID-19 abroad and the monetary and fiscal policies of major countries. Under the combined impacts of exchange rate conversion and asset price changes, China's foreign exchange reserves decreased in September.
Presently, the epidemic outside of China and the world economic situations remain complex and grim, and the destabilizing factors and uncertainties have increased remarkably. However, China has entered into a period of high-quality development, and the economic fundamentals of making progress amid stability and favorable long-term prospects remain unchanged. The basic characteristics of China’s economy – strong potential, great resilience, robust vitality and great space for maneuver as well as a wide array of policy instruments – have remained unchanged. The multi-dimensional advantages and conditions China has for development have not changed, which are conducive to the overall stability of foreign exchange reserves.