The State Administration of Foreign Exchange (SAFE) has recently released data on foreign exchange settlement and sales by banks as well as cross-border receipts and payments by non-banking sectors in February 2022. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on China’s foreign exchange receipts and payments of February 2022.

Q: Could you brief us on China’s foreign exchange receipts and payments in February 2022?

A: In general, China’s foreign exchange market operates smoothly. In February, the foreign exchange settlement and sales by banks recorded a surplus of US$4.2 billion. Taking into account of factors like forward settlement and sale of foreign exchange and option trading, the supply and demand of domestic foreign exchange were basically in balance. The cross-border receipts and payments by non-banking sectors, including enterprises, recorded a small deficit of US$6.5 billion. As of the end of February, the balance of foreign exchange reserves stood at US$3.2138 trillion, basically stable compared with the end of January.

Cross-border capital related to the real economy, such as trade and investment, continued to see net inflows. In February, the cross-border trade surplus in goods was US$25.7 billion, up by 41% year on year. The surplus of cross-border direct investment was US$8.8 billion, among which the net capital inflow of foreign direct investment in China remained relatively large and grew steadily year on year. As for the foreign exchange inflow brought by the above-mentioned trade and investment activities, part is to be settled by the domestic entities, while the other part will be held in the form of foreign currency deposits. From January to February, the settlement ratio (the ratio of foreign exchanges sold by clients to banks to their foreign-related foreign exchange receipts) reached 62.4%, down by 3.2% year on year. Meanwhile, the sales ratio (the ratio of foreign exchange bought by clients from banks to their foreign-related foreign exchange payments) reached 61%, down by 0.5% year on year.

At present, facing external complexities, COVID-19 pandemic and mounting inflation made it more difficult for countries to adjust their monetary policies, and high valuations also increased the vulnerability of international financial markets. However, China adheres to the general principle of seeking progress while maintaining stability. As a result, China’s economy continues to recover steadily, its fundamentals will continue to serve as a solid foundation for the basic equilibrium of balance of payment and overall stability of the foreign exchange market.