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

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

A: China’s foreign exchange market showed strong resilience, and foreign exchange settlement and sales by banks as well as cross-border receipts and payments by non-banking sectors both recorded a surplus. In August, the foreign exchange settlement and sales by banks registered a surplus of USD 25 billion, while the foreign-related receipts and payments by non-banking sectors, including enterprises and individuals, posted a surplus of USD 11.3 billion, both higher than the monthly average since the beginning of this year.

Market expectations remained stable, and the transactions in China’s foreign exchange market were in a rational and orderly manner. Recently, against the background of the strengthening of the US dollar, non-US currencies generally depreciated, but the exchange rate of the RMB was relatively stable, and relevant indicators reflecting exchange rate expectations in the foreign exchange market were running smoothly. In August, 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, reached 71%, which was 3 percentage points higher than the monthly average this year. It shows that market players maintained a rational trading mode of “settlement of foreign exchange at higher rates”, and their willingness to settle foreign exchange has been strengthened. 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%, basically the same as the monthly average since the beginning of this year, and the willingness of market players to purchase foreign exchange was generally stable.

The net inflow of cross-border capital under trade in goods continued to be relatively high, and the inflow of foreign capital through direct investment and other channels was steady with continuing upward trend. In August, the cross-border trade surplus in goods was USD 55.2 billion, up by 31% from July. At the meantime, the net inflow of direct investment in China increased compared with July. The situation of foreign investors’ investment in China’s bond and stock markets continued to improve, highlighting the long-term investment value of Chinese markets and RMB assets.

At present, the international situation is complex and grim, and world economic growth is significantly slowing down. China has continued to implement the efficient coordinated epidemic prevention and control as well as economic and social development. Given the effects of a package of supportive policy measures to stabilize the economy, China’s economy continues to recover, and the economic fundamentals that will sustain long-term growth remain unchanged. In the meantime, the structure of China’s international balance of payments has become more robust, the market-oriented regulation mechanism has become increasingly mature, and the participants in the foreign exchange market have become more rational. Moreover, the overall capacity to cope with changes in the external environment has been further improved, which lays a solid foundation for the stable operation of China’s foreign exchange market.