Topic:In the first quarter of this year, China’s cross-border capital flows remained stable, and supply and demand in the domestic foreign exchange market were independently balanced. At present, the impact of Sino-US trade friction on China’s balance of payments is generally controllable. In this context, the foreign exchange bureau will continue to promote trade and investment facilitation, steadily and orderly promote the two-way opening of capital projects and foreign exchange markets, and at the same time focus on preventing and defusing financial risks, improve the management framework of cross-border capital flows, and safeguard national economic and financial security.

　　"Overall, in the first quarter of this year, China’s cross-border capital flows remained stable, and supply and demand in the domestic foreign exchange market were independently balanced." On April 19th, at the press conference of the State Council Office, Wang Chunying, director and spokesperson of the Balance of Payments Department of the State Administration of Foreign Exchange, said that in the first quarter of this year, the global economy continued to recover steadily, and the volatility of the international financial market increased. China’s economic operation has maintained a steady and positive trend, the transformation and upgrading have been further promoted, and the quality and efficiency have been continuously improved. The exchange rate of RMB against the US dollar fluctuated in both directions and remained basically stable, and the exchange rate expectation was reasonably divided.

　　Two-way flow of cross-border funds

　　The situation is more stable.

　　With the normalization of monetary policies in major economies and the intensification of international financial market volatility, cross-border capital flows have attracted much attention in recent years. For the situation in the first quarter, Wang Chunying refined it into one sentence: the two-way flow of cross-border funds is more stable, and the pattern of independent balance between foreign exchange supply and demand is further consolidated.

　　According to the data released by the foreign exchange bureau, in the first quarter, the foreign-related income, expenditure, settlement and sale of foreign exchange of market entities showed steady growth. Foreign-related income of banks on behalf of customers increased by 25% year-on-year, foreign-related expenditure increased by 19%, foreign exchange settlement by banks increased by 16%, and foreign exchange sales increased by 9%, indicating that foreign-related economic activities of China’s market players have been promoted in an orderly manner and steadily.

　　It is worth noting that foreign exchange trading has not fluctuated greatly. In the first quarter, the RMB exchange rate showed a two-way fluctuation trend driven by market forces. In the first three months of this year, the central parity of the RMB against the US dollar appreciated by 3.9%, mainly reflected in the appreciation of 3.2% in January, and the two-way small fluctuations have become more obvious since February.

　　At the same time, the settlement and sale of foreign exchange by enterprises and individuals and the foreign exchange trading of market institutions such as banks are self-balanced. On the one hand, from the point of view of the settlement and sale of foreign exchange by enterprises and individuals, the balance is good, which has continued the trend of alternating small surplus and deficit for more than half a year. From January to March this year, the bank’s settlement and sale of foreign exchange on behalf of customers was a surplus of $2.3 billion, a deficit of $1.6 billion and $2.6 billion respectively; On the other hand, in the foreign exchange market, the foreign exchange supply and demand caused by forward and option transactions, as well as the foreign exchange trading of some overseas institutions participating in the inter-bank foreign exchange market, are other major foreign exchange supply and demand factors, which form a balanced relationship with the difference between the settlement and sale of foreign exchange by enterprises and individuals and realize the independent clearing of the market. Individual purchases of foreign exchange declined slightly month by month, and the cumulative purchases of foreign exchange in the first quarter decreased by 1% year-on-year.

　　"We believe that the overall balance and smooth operation of China’s cross-border capital flows will not change." Wang Chunying emphasized that China’s cross-border funds will still maintain a two-way flow and overall balance this year. Internationally, the momentum of global economic recovery has not changed, and the process of monetary policy normalization in major economies still meets market expectations. Of course, external unstable factors continue to exist, and the volatility of the international financial market has increased recently, but the stable factors still dominate. Domestically, the supporting factors of policies and economic fundamentals are more stable. The economy started well, and from the perspective of financial risk prevention and control, very strict arrangements have been made, including promoting the reform of financial supervision system, which have laid a solid foundation for the stable, sustained and healthy development of financial markets.

　　Trade friction on China

　　The influence of balance of payments is controllable

　　Under the background of Sino-US trade friction, all parties are also concerned about whether China will consider strengthening the management of cross-border capital flows or taking other measures to deal with it. "From the current point of view, the impact of Sino-US trade friction on China’s balance of payments is generally controllable." Wang Chunying said that the SAFE also made an in-depth analysis on the possible impact of cross-border capital flows in China.

　　At present, China’s current account balance is more balanced and will remain within a reasonable range. In recent years, China’s current account revenue and expenditure have been in a reasonable range of basic balance, and the ratio of current account surplus to GDP in 2017 was 1.3%. In the future, under the influence of internal and external economic and policy environment, the current account revenue and expenditure may be more balanced.

　　"In the short term, it is not ruled out that there will be fluctuations in individual quarters, but in the medium and long term, the current account revenue and expenditure will be a stable and orderly development process." Wang Chunying said that the new pattern of China’s opening to the outside world will continue to be promoted in an orderly manner, and the two-way opening of financial markets will be conducive to the balanced flow of cross-border capital. In addition, trade protectionism is not favored by the international market, and the sustained recovery of the euro zone, Japanese and other economies will restrain the sharp strengthening of the US dollar exchange rate, which will also help stabilize China’s cross-border capital flows. Therefore, the two-way flow and overall balance of cross-border funds in China will not change much.

　　"Of course, we will continue to pay attention to the progress of Sino-US trade friction, objectively evaluate and judge in time." Wang Chunying emphasized that in fact, we believe that the most fundamental way to adapt to or respond to external shocks or changes in the external environment is still to do our own thing and maintain the stable and healthy development of the domestic economy.

　　To this end, on the one hand, the SAFE will continue to promote trade and investment facilitation, focus on promoting trade and investment facilitation, deepen the reform of foreign exchange management, steadily and orderly promote the two-way opening of capital account and foreign exchange market, and serve the new pattern of comprehensive opening up of the country and the development of the real economy. On the other hand, we should focus on preventing and resolving financial risks, improve the management framework of cross-border capital flows, prevent cross-border capital flows risks, ensure the safety, flow, preservation and appreciation of foreign exchange reserves, and safeguard national economic and financial security.

　　Steady and orderly progress

　　Capital account convertibility

　　"We will steadily and orderly promote capital account convertibility and promote the two-way opening of financial markets. In this regard, we will continue to promote the opening of domestic stock and bond markets, improve bond links, study Huluntong, and support the interconnection mechanism of Shanghai-Hong Kong and Shenzhen-Hong Kong stock markets." Wang Chunying emphasized.

　　Recently, at the 2018 annual meeting of Boao Forum for Asia, Yi Gang, governor of the People’s Bank of China, announced the specific measures and timetable for further expanding the opening up of the financial industry, and made it clear that the opening up of the financial industry will cooperate with the reform of the exchange rate formation mechanism and the process of capital account convertibility to advance together.

　　Since the end of 2017, Shanghai and Shenzhen have launched a new round of QDLP (Qualified Domestic Limited Partner) and QDIE (Qualified Domestic Investment Enterprise) related work, and the market response has been positive. Wang Chunying introduced that recently, according to the pilot demand and foreign exchange situation in Shanghai and Shenzhen, the foreign exchange bureau plans to increase the total amount of these two places. In the next step, we will steadily support the opening of the financial market according to the pilot and balance of payments, and further improve the foreign exchange management systems such as QFII, RQFII and QDII, actively support domestic enterprises with the ability and conditions to carry out real and compliant foreign investment, optimize financial services and business environment, and promote the steady growth of foreign investment in China.

　　Next, China will steadily promote capital account convertibility, deepen the reform of the formation mechanism of RMB exchange rate marketization, establish and improve a more open and competitive foreign exchange market, and further enhance the freedom and convenience of cross-border trade and investment. At the same time, strengthen the supervision capacity building of the foreign exchange market, strengthen infrastructure construction, strengthen the operational capacity building of foreign exchange reserves, actively support the "Belt and Road" and international capacity cooperation, and ensure the safety, flow, preservation and appreciation of foreign exchange reserves. (Economic Daily China Economic Net reporter Chen Guojing)