China's cross-border capital outflows pressure eases

By：Xinhua Update：2016-07-22

BEIJING, July 21 -- Pressure on China's cross-border capital outflows eased during the first half of 2016, new data showed on Thursday.

Chinese banks saw a deficit of 49 billion U.S. dollars in foreign exchange sales and purchases in the second quarter, down from 124.8 billion U.S. dollars in the first, according to figures released by the State Administration of Foreign Exchange (SAFE).

This is attributable to the stable macroeconomic environment and subdued renminbi depreciation expectations, SAFE spokesperson Wang Chunying said at a news conference.

The narrowed forex sales/purchase deficit reflected an easing of pressure on cross-border capital withdrawal.

"Market sentiment has become more rational. Both Chinese companies and individuals are less willing to acquire foreign exchange," Wang noted.

But she said cross-border capital movements will remain "basically stable," due to China's relatively fast conomic growth, sound financial system, good fiscal balance, continuous current account surpluses and ample foreign exchange reserves.

China's economy expanded 6.7 percent year on year in the second quarter, unchanged from the previous quarter and a better reading than many had feared.

Exports and industrial profits have returned to growth, with manufacturing activity picking up and fixed-asset investment accelerating.

The ratio between the country's current account surplus and GDP was 1.6 percent in the first quarter, sharply down from a historic high of 10 percent and staying at an internationally-recognized reasonable level.

China has the world's largest forex reserves, which hit 3.21 trillion U.S. dollars at the end of June, up 13.4 billion U.S. dollars from the end of May.

"Adequate forex reserves provide China with a solid foundation to withstand external shocks," Wang said.

She denied that Britain's withdrawal from the European Union had had any major impact on China's cross-border capital movement.

However, Wang said China will step up monitoring and improve its policies to prevent any risks generating from cross-border capital movement.