The State Administration of Foreign Exchange (SAFE) has recently released data on surrender and purchase of foreign exchange and banks’ foreign-related receipts and payments on behalf of clients for July 2021. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on foreign exchange receipts and payments for July 2021.

Q: Could you brief us on the changes in China’s foreign exchange receipts and payments for July 2021?

A: The supply and demand of foreign exchange market were generally balanced in July. Major indicators showed that surrender and purchase of foreign exchange and non-banking sector’s foreign-related receipts and payments posted surpluses of US$9.8 billion and US$18.3 billion respectively, both lower than the monthly average level of the first half of the year, indicating that more equilibrium has been reached in China’s foreign exchange receipts and payments as well as in its foreign exchange supply and demand. By the end of July, foreign exchange reserves stood at US$3.2359 trillion, up by 0.68% over the end of June, mainly due to such factors as the appreciation of non-US dollar currencies against the US dollar and rising global asset prices.

The willingness of market entities to surrender and purchase foreign exchange was generally stable. In July, both the surrender and purchase ratios maintained the average levels of recent months, indicating that the transactions and expectations of market entities were basically stable. Among them, the surrender ratio that measures clients’ willingness to sell their foreign exchange, i.e., the ratio of foreign exchange clients sold to banks to their foreign exchange receipts from foreign-related transactions, recorded 69%; the purchase ratio that measures clients’ willingness to buy foreign exchange, i.e., the ratio of foreign exchange bought by clients from banks to their foreign exchange payments for foreign-related transactions was 64%.

Cross-border capital flows through major channels were rational, orderly and generally balanced. Cross-border receipts and payments under trade in goods continued to register a surplus in July, and the net inflow of foreign direct investment in China remained high. The increased net holdings of domestic bonds by foreign investors indicated that the renminbi-denominated assets remained attractive. On the other hand, corporate dividend payouts reached the seasonal peak, roughly the same level as the same period of the previous years. The net payment of service trade continued to run low, and the foreign direct investment by domestic entities remained generally stable.

At present, the global epidemic is still evolving and the recovery of the world economy is uneven, indicating a more complex and severe external environment. However, China has achieved a stable and sustained economic recovery, and momentum of development is gathering. Steady progress has been made in the two-way opening-up of financial market and the foreign exchange market has become more mature, which will provide a strong support for the steady development of China’s foreign exchange receipts and payments.