China continues to record net inflow of cross-border capital in April

Photo taken on Aug. 15, 2021 shows a view of the Ningbo-Zhoushan Port in east China's Zhejiang Province. (Xinhua/Suo Xianglu)

BEIJING, May 17 (Xinhua) -- China has continued to record a net inflow of cross-border capital, and has maintained the yuan's generally stable exchange rate as Chinese banks reported a large net foreign exchange purchase last month, official data showed on Tuesday.

Chinese lenders bought 229.7 billion U.S. dollars worth of foreign currencies and sold 210.6 billion dollars' worth in April. That resulted in a net purchase of 19 billion dollars, said the State Administration of Foreign Exchange.

China's development pattern of a stable forex market and balanced cross-border capital flows has remained unchanged, said Wang Chunying, the administration's deputy head.

The tightening of monetary policies in major developed economies will have a spillover effect on the flows of international capital, but China's forex market has become more mature and resilient to allow it to adapt better to changes in the external environment, Wang told Xinhua in an interview.

The recent two-way adjustment in cross-border stock investments will neither affect the overall balance of cross-border capital flows nor impact the trend of overseas investors steadily increasing their holdings of yuan assets, she said.

Stock investment is only one part of cross-border capital flows, and it does not represent the overall situation, she said.

Commenting on the recent depreciation of the yuan, Wang said it was a short-term adjustment that will not change the general characteristics of the yuan's exchange rate featuring two-way fluctuations and general stability at a reasonable and balanced level.

"For a mega economy like China, the long-term trend in the exchange rate is mainly determined by domestic fundamentals," she told Xinhua, noting that despite recent depreciation against the U.S. dollar, the yuan has remained relatively stable against other major currencies.

With the dollar index having surged about 9 percent since the beginning of this year, major currencies such as the euro, the Japanese yen and the British pound have all depreciated 8 to 10 percent against the greenback, while the yuan has depreciated just 6 percent on the domestic market, Wang said.

The value of the yuan and investment returns on yuan assets have both remained stable, and the independent market trend of yuan assets means they are a good choice for investment diversification, she said.

The share of the Chinese yuan in the International Monetary Fund's Special Drawing Rights basket has risen from 10.92 percent to 12.28 percent, China's central bank announced over the weekend.

"The move has fully reflected the recognition and confidence of the international community in China's economy and its financial market development," Wang said.

She said that serving the real economy is now a priority for the forex regulator, which will accelerate the implementation of supportive policies and simultaneously help enterprises manage risks posed by exchange rate fluctuations.