The State Administration of Foreign Exchange (SAFE) has recently released the data on external debt at the end of June 2022. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on the relevant issues.

Q: Could you brief us on China’s external debt in the second quarter of 2022?

A: China’s external debt declined in the second quarter of 2022. By the end of June 2022, the full-scale outstanding external debt (including domestic and foreign currencies) reached USD 2.636 trillion, representing a decrease of USD 74.2 billion or 3% from the end of March this year. To be more specific, the factor of exchange rate translation contributed about 90% to the decline in outstanding foreign debt.

The external debt structure remained basically stable. With respect to currency structures, at the end of June 2022, the outstanding external debt in domestic currency accounted for 44% of China’s full-scale external debt. In terms of maturity structure, the outstanding medium and long-term external debt accounted for 46%. Both the proportion of the outstanding external debt in domestic currency and that of the outstanding medium and long-term external debt decreased by 1 percent point from the end of March this year.

Q: What would you say about current China’s external debt situations?
A: The foundation for long-term stability of China’s external debt remains solid. As previously mentioned, the decline in external debt in the second quarter was mainly due to the factor of exchange rate translation. In general, China has effectively coordinated epidemic prevention and control as well as economic and social development, and at the mean time China has sustained its strong resilience, enormous potential, and vast room for maneuver in economy with its fundamentals of sound long-term growth unchanged. Besides, Chinese assets, including RMB-denominated bonds, remain attractive to foreign investors. As a result, the basis for maintaining the overall stability in the scale of China’s external debt remains solid.

The fluctuation in the scale of China’s external debt is expected to remain in a narrow range in the short term, and China’s external debt risks are generally under control. At present, with the external environment becoming more complex and severe, the downward pressure on the global economy has increased and the turbulence in the international financial market has intensified. It is thus expected that, in the near future, the fluctuation in the scale of China’s external debt will maintain in a narrow range. In addition, the main indicators of China’s external debt are currently all within the internationally recognized thresholds, and the risks of external debt are generally under control.