The State Administration of Foreign Exchange (SAFE) has recently released the data on foreign exchange settlement and sales by banks and cross-border receipts and payments by non-banking sectors for November 2020. Wang Chunying, the SAFE’s deputy administrator and press spokesperson, answered media questions on foreign exchange receipts and payments for November 2020.

Q: Could you brief us on the changes in China's foreign exchange receipts and payments for November 2020?

A: China’s foreign exchange market remained robust in November, with cross-border receipts and payments at an adaptive, balanced level. The major indicators show that banks registered a surplus of US$3 billion in foreign exchange settlement and sales, and non-banking sectors recorded a surplus of US$400 million in cross-border receipts and payments. This indicates transactions on the foreign exchange market are rational and orderly at present with generally balanced cross-border capital flows. By the end of November, the balance of foreign exchange reserves was US$3.1785 trillion, which was basically stable.

Generally, market players’ willingness to settle and sell foreign exchange remained stable. In November, the foreign exchange settlement ratio that measures the willingness to settle foreign exchange, or the ratio of foreign exchange sold by customers to banks to customers’ foreign-related foreign exchange receipts, was 63%, consistent with that for the same period of the previous year. The foreign exchange sales ratio, a measure of market players' willingness to purchase foreign exchange, or the ratio of purchase of foreign exchange by customers from banks to the customers' foreign-related foreign exchange payments, was 65%, down slightly by one percentage point year on year.

Cross-border capital flows through major channels registered both increases and decreases, showing rational differentiation. In November, driven by foreign trade surplus recorded by the customs, the surplus in foreign exchange settlement and sales under trade in goods registered gains of US$5.5 billion on a year-on-year basis; and the deficit in foreign exchange settlement and sales under trade in services decreased by US$5.6 billion year on year and remained low. Cross-border two-way direct investment remained robust, with net capital inflows consistent with the level of the same period of the previous year. Two-way stock investments stayed stable. Foreign investors bought A-shares worth renminbi 57.9 billion net through northbound trading, and domestic residents bought H-shares worth renminbi 60.1 billion net through southbound trading.

Currently the foreign exchange market is stable and orderly, with cross-border capital flows in two-way equilibrium. However, given the spread of COVID-19 and considerable uncertainties in external environment, financial institutions and enterprises need to raise the risk-neutral awareness and effectively manage their operational risks.