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 July 2022. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on China’s foreign exchange receipts and payments of July 2022.

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

A: In general, China’s foreign exchange market operated smoothly, and the supply and demand of foreign exchange market within China kept in balance. In July, due to the influence of seasonal factors such as corporate dividend payouts, the foreign-related receipts and payments by non-banking sectors, including enterprises and individuals, posted a small deficit, which was a normal fluctuation within the balance range. However, in early August, it posted surplus of more than USD 10 billion. The current situation of foreign-related receipts and payments has not changed the overall pattern of domestic foreign exchange supply and demand. In July, the scale of the foreign exchange settlement and sales by banks was basically the same. Taking into account other supply and demand factors, the domestic supply and demand of foreign exchange remained in basic balance. The volume of China’s foreign exchange reserves remained stable. By the end of July 2022, China’s foreign exchange reserves stood at USD 3.1041 trillion, up by USD 32.8 billion from the end of June, mainly due to the combined effects of currency translation and asset price changes.

The transactions in China’s foreign exchange market were in a rational and orderly manner, and the willingness of market entities to surrender and purchase foreign exchange was generally stable. In July, the foreign exchange settlement rate, the measurement of customers’ desire to settle foreign exchange, or the ratio of foreign exchange sold by customers to banks to foreign exchange received by customers, increased by 6.1 percentage points from June and reached 71%, at a relatively high level in recent years. On the other hand, the foreign exchange sales rate which measures customers’ desire to buy foreign exchange, or the ratio of foreign exchange purchased by customers from banks to foreign-related foreign exchange payments made by customers, stood at 67%, an increase of 1.8 percentage points from June, which maintained stable on the whole.

The continued surplus in the current account played an important role in maintaining the balance in China’s foreign exchange supply and demand. According to the preliminary data, in the first half of 2022, the current account surplus stood at USD 169.1 billion, a year-on-year increase of 45%, and its ratio to Gross Domestic Product (GDP) reached 1.9%, which maintained within a reasonable and balanced range. And the current account continued maintaining a reasonable scale of surplus in July. Since the beginning of this year, the surplus of foreign-related receipts and payments and foreign exchange settlement and sales under the current account have been at high levels in recent years, which was an important source of foreign exchange funds for China. To be specific, trade in goods showed strong resilience. In July, trade in goods in terms of foreign-related receipts and payments registered a surplus of USD 42.1 billion, reflecting the relative advantages of China’s industrial chain and supply chain as well as the achievements of the transformation and upgrading of these areas in recent years.

Looking ahead to the future, there are still many unstable and uncertain factors in the external environment. However, China has continued to implement the efficient coordinated epidemic prevention and control as well as economic and social development. China’s economy has continued to recover, with its long-term sound fundamentals unchanged. Meanwhile, China’s foreign exchange market has become more resilient, and thus it has the foundation and conditions to continue to operate smoothly.