China sees forex payment-receipt surplus in H1

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02:13

China’s foreign currency payment and receipt balances have turned in gaping losses in the past but that trend is reversing in 2018, according to data released by State Administration of Foreign Exchange (SAFE) on Thursday.

Foreign currency receipts reached 928.2 billion US dollars in the first half of the year, while payments accounted for 914.4 billion, leading to a surplus of 13.8 billion US dollars. Comparatively, official data showed that 2017's first half balance had a 93.8 billion US dollar deficit.

"The surplus defrays prior deficits and we hope this positive trend continues. Meanwhile, China's foreign currency reserve dropped, compared with the beginning of 2018. This is mainly because of exchange rate fluctuation," Wang Chunying, Director General of Balance of Payment Department of SAFE, said at the media briefing.

There is a deficit in terms of forward settlements in the first half of 2018. Chinese banks' forward settlement contracts grew by 91 percent year-on-year, while forward sales increased by 163 percent, resulting in a 24.8 billion US dollar shortfall.

In terms of Chinese banks' foreign currency forwards, the deficit in the second quarter narrowed by 60 percent from that of the first quarter, according to Wang.

Although there is a lot of uncertainty in global business because of unilateralism and protectionism, Wang expresses confidence in China's financial sector.

"Financial risks are still controllable in general. China has an abundant foreign currency reserve, and enough room to maneuver. So I think we are capable, confident, and well equipped to face any challenge."

China's current account does show a slight deficit in the first quarter. Analysts point out that it's a result of rising Chinese demand for imported goods and overseas traveling and studying. So China's current account is operating in a reasonable range and a wide deficit is unlikely in the long run.