The State Administration of Foreign Exchange (SAFE) has recently released the data on external debt at the end of September 2021. The SAFE deputy administrator and press spokesperson Wang Chunying answered media questions on China’s recent external debt situations.
Q: Could you brief us on China’s external debt in the third quarter of 2021?

A: In the third quarter of 2021, the scale of China’s external debt was overall stable with a slight increase. By the end of September 2021, the full-scale outstanding external debt (including domestic and foreign currencies) reached US$2.6965 trillion, up by US$16.7 billion or 0.6% from the end of June 2021. The growth in external debt was mainly due to the increase in the allocation of special drawing rights (SDR) by the central bank and the increase in the holdings of domestic renminbi bonds by foreign investors.

The external debt structure continued to be optimized. By the end of September 2021, the medium and long-term external debt accounted for 47%, up by 3% quarter on quarter. The increase in the proportion of medium and long-term external debt further improved the stability of the external debt structure.

Q: What would you say about China’s external debt situations?

A: The growth of external debt has slowed down and the risks are generally under control. China’s external debt growth slowed in the third quarter of 2021. Thanks to coordinated pandemic response and economic and social development, China has kept recovering in economy with an increase in renminbi bonds held by foreign investors. It reflects the achievements of two-way opening-up of China’s financial market as well as investors’ confidence in China’s economic prospects. The main indicators of China’s external debt are all within the internationally recognized safety line, and the risks of external debt are generally under control.

The scale of external debt is expected to stay stable in the future. At present, the COVID-19 pandemic still recur around the world. Some developed economies are gradually withdrawing quantitative easing monetary policy. And the external environment is becoming more complex and severe. However, China keeps its economic resiliency and the long-term improvement of the fundamentals. It is expected that the scale of external debt will remain stable in the future. The SAFE will continue to pay close attention to changes in the size and structure of external debt to prevent cross-border financing risks by guiding external debt funds to serve the real economy in an effective manner.