China News Service, January 22. Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, stated on the 22nd that since the second half of 2020, the rebound of the RMB against the US dollar is the result of changes in the internal and external environments.
Observations show that the periodic appreciation of the RMB exchange rate will have a normal impact on the balance of payments.
On the morning of the 22nd, the State Council Information Office held a press conference on the data of foreign exchange receipts and payments in 2020.
At the meeting, a reporter asked: The recent overall appreciation of the RMB exchange rate, what impact has this had on my country's balance of payments?
Wang Chunying responded that the RMB exchange rate has recently attracted great attention from all walks of life. There are several judgments on the impact of the balance of payments for your reference, and I hope you can look at it objectively.
Since the second half of 2020, the renminbi has rebounded against the U.S. dollar due to the market results of changes in internal and external environments.
From a domestic perspective, China’s epidemic prevention and control situation continues to be stable, the economy is gradually returning to normal, foreign trade, investment, and consumption indicators are all stable and improving, and the monetary policy remains normal.
At the same time, the process of opening up the financial sector to the outside world has continued to advance, and the attractiveness of RMB assets to foreign capital has increased, which has supported the RMB exchange rate.
From an international point of view, the epidemic in developed countries is still spreading, economic performance is weak, the US dollar index has fallen rapidly, and is generally at a low level in recent years, and non-US dollar currencies have generally appreciated against the US dollar. These are the main reasons for the rebound of the renminbi.
The observation results show that the periodic appreciation of the RMB exchange rate has an impact on the balance of payments within the normal range.
First, the pattern of maintaining a reasonable surplus in my country's current account has not been changed.
On the whole, China's exports in the second half of 2020 increased by 13% year-on-year, and trade in goods maintained a relatively high surplus.
From the perspective of service trade, when the epidemic has not yet been fully controlled, travel spending has shrunk sharply, resulting in a sharp drop in the service trade deficit, and the current account has continued a small surplus.
The surplus in the third quarter was 92.2 billion U.S. dollars, and its ratio to GDP reached 2.4%. It is expected that the fourth quarter will remain at a similar level.
Therefore, the recent rebound of the renminbi has not affected the relatively sound development momentum of the balance of payments.
From a micro-individual point of view, the appreciation of the RMB exchange rate has certain benefits for corporate imports, foreign investment, and personal foreign exchange use.
Some export companies may feel stronger about the appreciation of the renminbi, but we have also found that there are big differences between different companies, and many companies have shown relatively strong adaptability and response capabilities.
Specifically, China is currently making up for the global output gap, which not only reflects the relative advantages brought about by the resumption of work and production at home, but also meets the needs of the global epidemic.
Some export products involve the import of raw materials and semi-finished products, and the impact of RMB exchange rate appreciation can be partially hedged within the enterprise.
Some foreign trade companies have hedged their value to avoid exchange rate risks.
Our investigation revealed that some export companies use non-US currencies such as RMB or Euro for settlement. The appreciation of RMB against the US dollar has limited impact on these companies.
On the whole, my country's foreign trade and balance of payments operations have shown relatively strong resilience, and the current account has not changed to maintain a reasonable surplus.
Second, it has not changed the overall balance of cross-border capital flows in my country.
Judging from the balance of payments, from July to November, the net inflow of foreign investment in China was US$270 billion, and domestic foreign investment of US$340 billion.
From the perspective of major projects, first of all, cross-border two-way direct investment grew steadily, continuing a small surplus, which was US$40 billion from July to November.
Secondly, two-way securities investment is more active, with a surplus of 70 billion US dollars in two-way securities investment from July to November.
Among them, foreign investment in securities in China increased by 93% over 2019, mainly due to foreign investment in increasing domestic bond holdings.
Our external securities investment also showed a relatively high growth rate of 40%. Domestic residents are more enthusiastic about investing in Hong Kong stocks.
Thirdly, the overall deficit in other investments was seen in July-November. The deficit was more than US$180 billion, mainly due to the increase in China's foreign deposits and loans and trade credit.
On the whole, cross-border capital flows throughout the year remained within a reasonable equilibrium range.
"We have also communicated with you before. The international balance of payments is mainly affected by the domestic economic structure and the two-way open pattern. Maintaining the RMB exchange rate basically stable at a reasonable and balanced level and giving play to the decisive role of the market in the formation of exchange rates is the country's consistent adherence Therefore, we think that the future exchange rate will play a better role as an automatic stabilizer in adjusting the balance of payments. From the fundamental reason of the balance of payments decision and the role of the exchange rate, we believe that the balance of payments is the basis for overall balance It will not change easily." Wang Chunying said.