Chinanews.com, October 23. Under the global low interest rate environment, will China face substantial capital inflows?
At the press conference held by the State Information Office today on foreign exchange receipts and expenditures data for the first three quarters of 2020, Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, responded that internal conditions are conducive to the balanced flow of cross-border funds in China, and the balance of payments The long-term overall balance pattern will not change.
Wang Chunying said that the current major developed economies implement very loose monetary policies, which are somewhat similar to the external environment after the 2008 international financial crisis, but the internal environment that affects China's cross-border capital flows has undergone relatively large changes.
Overall, internal conditions are conducive to the balanced flow of cross-border capital in China.
First, China's balance of payments, especially the current account, has moved from a high surplus to a basic balance.
Historically, China's current account surplus has been at a high level. Its ratio to GDP reached its peak in 2007, and then fell back to around 2% after 2011. In the first half of this year, it continued to remain within a reasonable equilibrium range.
The evolution of the current account is the result of the transformation and upgrading of the domestic economy and the optimization of the economic structure, which reflects the transformation of my country's economy based on the domestic cycle.
In recent years, a basically balanced international balance of payments pattern has been formed, and this pattern formed by structural factors will not easily change.
The current account of the balance of payments shifted from a high surplus to a basic balance, which is an obvious change affected by internal conditions or the internal environment.
Second, the two-way opening of financial markets.
Two-way opening will help broaden the channels for balanced cross-border capital flows.
While facilitating and attracting foreign capital to invest in China's domestic market, China is also constantly opening up and facilitating domestic investors to participate in overseas investment and participate in global asset allocation.
Opening up in these two areas is conducive to broadening the channels for the balanced flow of cross-border capital.
Finally, the market regulation mechanism is more mature and rational.
In recent years, the RMB exchange rate formation mechanism has been continuously improved, and the flexibility of exchange rate two-way fluctuations has increased. The exchange rate expectations of market entities have become more rational and moderately differentiated. There is no very consistent unilateral appreciation and devaluation expectations, and short-term arbitrage funds have been greatly reduced.
In this context, market transactions focus on actual needs, hedging to avoid risks, and asset value preservation and appreciation.
This rational transaction is conducive to maintaining the stable, reasonable and balanced flow of cross-border funds.
The exchange rate can play a role in regulating the macro economy and an automatic stabilizer of international payments. Even if there is an increase in cross-border capital inflows in certain periods and channels, it will not change the overall balance of international payments in the medium and long term.