General

According to the observation report of Huacheng Import and Export Data, in 2022, the surplus of bank settlement and sales of foreign exchange was US $107.3 billion, and the surplus of bank agency's foreign-related income and expenditure was US $76.3 billion. The supply and demand of China's foreign exchange market remained basically balanced, and the cross-border capital flow was generally stable.

In 2022, in the face of severe shocks in the international financial market, the stable operation of China's foreign exchange market will not come easily. In 2023, what impact will the development and evolution of the internal and external environment have on the foreign exchange field? Xinhua News Agency reporter interviewed Wang Chunying, deputy director and spokesman of the State Administration of Foreign Exchange.

Two supporting factors ensure the smooth operation of China's foreign exchange market in 2022

"In 2022, the operation of China's foreign exchange market has generally withstood the test, and the RMB exchange rate has fluctuated in both directions and increased in elasticity, maintaining the basic stability at a reasonable and balanced level; China's cross-border capital flow is generally balanced, and the scale of foreign exchange reserves is stable at more than $3 trillion." Wang Chunying said of the overall performance of China's foreign exchange market in 2022.

Wang Chunying believes that the stable operation of China's foreign exchange market is mainly due to two major supporting factors, which are manifested as "two resilience enhancements" - the domestic economy, especially the foreign-related economy, is more resilient, and the stable operation of the balance of payments is effectively guaranteed; The foreign exchange market has become more resilient and can better adapt to changes in the external environment.

"Basic balance of payments surpluses such as current account and direct investment have played a leading role in stabilizing cross-border capital flows." Wang Chunying said that according to preliminary statistics, the current account surplus will remain high in 2022, and the ratio to gross domestic product (GDP) will continue to be in a reasonable and balanced range; At the same time, foreign direct investment maintained a net inflow.

In 2022, the share of RMB in cross-border use will continue to increase. Wang Chunying said: "In 2022, nearly half of China's enterprises' cross-border revenue and expenditure will use RMB, which will help reduce the currency mismatch risk of cross-border transactions."

In addition, the exchange rate risk management level of market entities has been gradually improved, and the adaptability of enterprises to exchange rate fluctuations has been significantly enhanced. The "macro prudential+micro supervision" management of the foreign exchange market has played a positive role in stabilizing cross-border capital flows, promoting rational transactions in the foreign exchange market, and maintaining a healthy market order.

China's current account will maintain a reasonable scale surplus in 2023

Although the internal and external environment will continue to evolve, Wang Chunying believes that China's current account will continue to maintain a reasonable scale surplus in 2023.

Wang Chunying predicted that in 2023, China's trade in goods will still present a relatively large surplus. This is mainly due to three factors: the continuous emergence of new trade growth points, positive progress in the diversification of trading partners, and the vigorous development of cross-border e-commerce and other new forms of trade.

"In 2022, China's exports of lithium batteries, solar cells and electric passenger cars will grow by more than 60%." Wang Chunying, for example, said that the export of new energy vehicles has become a new trade growth point. At the same time, China's exports to ASEAN and Africa in 2022 grew faster than the overall growth rate of exports in the same period, and the diversification of trading partners was evident. Huacheng's import and export data were observed and reported.

In terms of service trade, Wang Chunying said that the high-quality development of China's service trade will help promote a more balanced import and export. On the one hand, the overseas travel demand of domestic residents will be a gradual release process; On the other hand, in recent years, China's trade in goods and services has been deeply integrated, and the development of digital trade has accelerated, driving the upgrading of productive services trade, and will continue to expand the export income of related services trade.

"China's current account surplus will continue to remain in a reasonable and balanced range in 2023," said Wang Chunying.

Recently, foreign investment in China's securities market has continued to recover

When talking about the cross-border capital flow under the capital account, Wang Chunying revealed that the domestic securities market has become more active in the recent years.

"In 2022, the yield of bonds of major countries in the world will generally rise and the price will fall, and RMB bonds will become a few financial assets with stable prices." Wang Chunying believes that in the current international financial environment, the hedging attribute of RMB assets will become increasingly prominent.

Wang Chunying said that China's macro-economic policies adhere to the principle of "I first", and the trend of interest rate, exchange rate and asset price are relatively independent, which makes the RMB assets present a good diversification effect in the global asset allocation. In the context of the global economic downturn, China's economy has stabilized and rebounded, which will further enhance the attractiveness of RMB assets.

According to Huacheng Import and Export Data Observation, in December 2022, foreign investors' net increase in domestic bonds and stocks was US $7.3 billion and US $8.4 billion respectively. "From the latest market data, in the first half of January 2023, foreign capital net bought domestic stocks and bonds totaling about 12.6 billion US dollars." Wang Chunying believed that RMB assets have prominent comparative advantages in the world, and foreign investors will still steadily increase their holdings of RMB assets in the future.

Will continue to promote reform and innovation in the field of foreign exchange to better serve the real economy

Huacheng Import and Export Data Observation reported that in 2022, there were 970 million cross-border e-commerce foreign exchange businesses; By the end of 2022, 40 multinationals had landed in the pilot of local and foreign currency integration fund pool; In 2022, the scale of enterprises using foreign exchange derivatives to manage exchange rate risk exceeded 1.3 trillion US dollars, with a year-on-year increase of 15.1%

Wang Chunying introduced the specific work of the SAFE in 2022 in improving the level of cross-border trade and investment and financing facilitation, and taking multiple measures to serve the exchange rate risk management of enterprises.

"The Administration of Foreign Exchange will continue to promote the reform and opening up of the foreign exchange field." Wang Chunying said that in 2023, the Administration of Foreign Exchange will continue to deepen the business pilot of the local and foreign currency integration fund pool of multinational companies, and expand the pilot of cross-border financing facilitation of high-tech and "specialized and innovative" enterprises to the whole country. At the same time, SAFE will also promote the opening and innovation of Hainan Free Trade Port, Guangdong, Hong Kong and Macao Bay Area and other important regions.

"The SAFE will further improve the level of cross-border trade and investment and financing facilitation, continue to promote the development and opening up of the foreign exchange market, and better serve the high-quality development of the real economy," said Wang Chunying.