As shown in the statistics of the State Administration of Foreign Exchange (SAFE), in July 2024, the amount of foreign exchange settlement and sales by banks was RMB 1316.9 billion and RMB 1705.7 billion, respectively. During January to July 2024, the accumulative amount of foreign exchange settlement and sales by banks was RMB 8874.0 billion and RMB 10071.2 billion, respectively.

In the US dollar terms, in July 2024, the amount of foreign exchange settlement and sales by banks was USD 184.7 billion and USD 239.2 billion, respectively. During January to July 2024, the accumulative amount of foreign exchange settlement and sales by banks was USD 1248.3 billion and USD 1416.5 billion, respectively.

In July 2024, the amount of cross-border receipts and payments by non-banking sectors was RMB 4436.3 billion and RMB 4535.2 billion, respectively. During January to July 2024, the accumulative amount of cross-border receipts and payments by non-banking sectors was RMB 28656.3 billion and RMB 29173.2 billion, respectively.

In the US dollar terms, in July 2024, the amount of cross-border receipts and payments by non-banking sectors was USD 622.1 billion and USD 635.9 billion, respectively. During January to July 2024, the accumulative amount of cross-border receipts and payments by non-banking sectors was USD 4030.8 billion and USD 4103.6 billion, respectively.

As cross-border capital flows improved in July, the supporting role of major inflow channels such as trade in goods was further strengthened, with cross-border receipts by non-banking sectors increasing by 9% month-on-month and payments increasing by 7%, and the balance of payments deficit narrowing by 41% from the previous month. In particular, the continued rapid growth of China’s foreign trade has led to a 48% increase month-on-month in net cross-border capital inflows under trade in goods, the highest level in the same period in history. Foreign investors increased their holdings of domestic bonds by a net of USD 20 billion, an increase of 1.4 times over the previous period, indicating that foreign investors are still highly motivated to allocate RMB assets.

Going forward, as the internal and external environments improve, favorable factors for the smooth operation of China’s cross-border capital flows will further increase. Domestically, the Third Plenary Session of the 20th CPC Central Committee has made systematic arrangements to further deepen comprehensive reforms and promote Chinese-style modernization, which has effectively boosted market confidence, and the upturn of the domestic economy will be consolidated and strengthened. We’ll see continued deepening of reformand opening-up in the field of foreign exchange administration, and a more resilient foreign exchange market. Externally, international trade is expected to return to growth, with the World Trade Organization projecting that global trade in goods will increase by approximately 2.6% in 2024 from a decline of 1.2% in 2023. In the meantime, expectations are building for the Federal Reserve to cut interest rates, and major non-US currencies have stabilized and rebounded recently. There is hope for a progressive improvement in the global foreign exchange market.

Addendum: Glossary and relevant definitions

Balance of payments (BOP) refers to all economic transactions between residents and non-residents.

Foreign exchange settlement and sales by banks refers to settlement and sale transaction that bank executes for customers and for the banks themselves, including statistic data on settlements of forward contracts for foreign exchange settlement and sales and the exercises of option, and excluding the transactions in the interbank foreign exchange market. The statistic reporting date of Foreign exchange settlement and sales by banks should be the trade day of the Foreign exchange settlement and sales transaction. By definition, foreign exchange settlement means that foreign exchange holders sell foreign exchange to banks, and foreign exchange sales means that banks sell foreign exchange to foreign exchange buyers.

The newly signed contract amount of forward foreign exchange settlement and sales refers to the binding forward contract between a bank and its client that predetermines foreign exchange currency, amount, exchange rate and tenor which to be executed upon maturity.

The unwind amount of forward foreign exchange settlement and sales refers to, where client is unable to perform the original forward contract due to change in its real demand, client to fully or partially close its forward position by executing another deal with opposite direction to the original contract.

The rolling amount of forward foreign exchange settlement and sales refers to client to adjust the settlement date of original contract due to change in its real demand.

The outstanding amount of forward foreign exchange settlement and sales by the end of the current period refers to the total amount of forward contracts accumulated from all non-matured forward contracts with client.

The net Delta exposure of outstanding options refers to the implied foreign exchange spot risk exposure from outstanding option contracts that bank executed with client.

The cross-border receipts and payments by non-banking sectors refers to the receipts and payments between domestic non-banking sectors (including institutional and individual residents) and non-residents through domestic banks, excluding receipts and payments in cash. In particular, the statistics includes cross-border receipts and payments between non-banking sectors and non-residents through domestic banks (including RMB and foreign currency), and domestic receipts and payments between non-banking sectors and non-residents through domestic banks (temporarily excluding domestic receipts and payments in RMB between individual residents and non-resident individuals). Data are collected when customers conduct receipts and payments with non-resident counterparties at domestic banks. Specifically, the receipts refer to the capital of non-banking sectors received from non-residents via domestic banks; the payments refer to the capital of non-banking sectors paid to non-residents via domestic banks.