State Administration of Foreign Exchange Issues Latest Statement! Concerns Renminbi Exchange Rate and Foreign Investment in Domestic Stocks

    Li Bin, Deputy Director and Spokesperson of the State Administration of Foreign Exchange:

    The market currently holds no significant expectations for either appreciation or depreciation of the renminbi. Foreign exchange market transactions remain rational and orderly.

    Li Bin stated that expectations in the foreign exchange market remain stable. Judging from indicators such as forwards and options, the market currently holds no significant expectations for either appreciation or depreciation of the renminbi. Market transactions are rational and orderly. Overall, there are no irrational trading behaviors such as chasing gains or cutting losses.

    The RMB exchange rate has the conditions to maintain fundamental stability at a reasonable and balanced level.

    Li Bin emphasized that high-quality economic development, steady progress in opening up, and the continuously enhanced resilience of the foreign exchange market—these three favorable factors will support the continued stable operation of China's foreign exchange market. The RMB exchange rate has the conditions to maintain fundamental stability at a reasonable and balanced level.

    In the first half of the year, the RMB appreciated by 1.9% against the US dollar.

    Li Bin noted that the RMB exchange rate remained fundamentally stable in the first half of the year. The RMB appreciated by 1.9% against the US dollar during this period. The exchange rate fluctuated within a range of 7.15 to 7.35 against the US dollar, maintaining fundamental stability at a reasonable and balanced level while also serving as an automatic stabilizer for macroeconomic and international payments adjustments.

    Six additional banks launched foreign exchange business reforms in the first half of the year

    Li Bin announced that six additional banks launched foreign exchange business reforms in the first half of this year. The total number of participating banks now stands at 22. The reforms cover institutions including large state-owned commercial banks, nationwide joint-stock commercial banks, city commercial banks, and foreign banks, with operations expanded nationwide. Participating banks have currently classified over 20,000 clients as Category I business clients, representing a 23% increase from the end of 2024.

    Net Inflows of Equity-Type Direct Investment into China Up 16% YoY in Jan-May

    Li Bin noted that China's current account surplus has remained stable with slight growth this year, maintaining a reasonable and balanced level consistent with the financial account surplus. The non-reserve financial account recorded a deficit roughly equivalent to the current account surplus, reflecting a self-balancing pattern in the balance of payments. From January to May, net inflows of equity-type direct investment into China reached $31.1 billion, a 16% year-on-year increase. while net inflows of securities investment into China reached approximately $33 billion, reversing the net outflow trend seen in the latter half of last year.

    Domestic RMB Foreign Exchange Market Trading Volume Reaches $21 Trillion in First Half

    Li Bin noted that the foreign exchange market remained active in the first half of the year. Total trading volume in the domestic RMB foreign exchange market reached $21 trillion, up 10.2% year-on-year.

    Foreign-related Receipts and Payments Total $7.6 Trillion in First Half, Setting New Record for Same Period

    Li Bin noted that cross-border receipts and payments by non-bank sectors, including enterprises and individuals, totaled $7.6 trillion in the first half, up 10.4% year-on-year, reaching a record high for the same period.

    Jia Ning, Director of the Balance of Payments Department at the State Administration of Foreign Exchange:

    Foreign investors net increased holdings of domestic stocks and funds by $10.1 billion in the first half

    Jia Ning stated that since the beginning of this year, foreign investors' allocation of RMB assets has remained generally stable, with increased investment in RMB bonds. Foreign holdings of onshore RMB bonds currently exceed $600 billion, reaching a historically high level. Recent foreign investment in domestic stocks has shown overall improvement, with foreign investors net purchasing $10.1 billion worth of domestic stocks and funds in the first half of the year. This reverses the overall net selling trend seen over the past two years. Notably, net purchases surged to $18.8 billion in May and June, indicating increased global capital allocation to China's stock market. We assess that foreign capital allocation to RMB assets will continue to have stable and sustainable growth potential.

    China's service trade deficit narrowed by 14% in the first half of the year, with cross-border travel revenue surging 42%.

    Jia Ning stated that in recent years, China's service trade revenues have steadily expanded while expenditures have grown steadily, leading to an overall narrowing of the deficit. In the first half of this year, China's service trade revenues increased by 13% year-on-year, with cross-border travel revenues rising by 42%. Service trade expenditures grew by 2%, resulting in a 14% decrease in the service trade deficit.

    Survey Shows 30% of Global Central Banks Plan to Increase RMB Asset Allocations

    Jia Ning noted that amid heightened volatility in international financial markets in recent years, investors widely recognize the need for more diversified and dispersed global asset allocation. With its stable value and relatively independent performance globally, renminbi assets have become a crucial tool for risk diversification and an important target for enhancing returns among global investors. Recent surveys of 75 central banks worldwide indicate that 30% plan to increase their allocation of renminbi assets.