A clerk counts Chinese 100 yuan banknotes at a branch of China Construction Bank in Nantong, Jiangsu Province, Dec. 2, 2014. (Photo : Reuters)
A Forex administrator said on Thursday, Feb. 4, that China’s money outflow in 2015 should not be equated to foreign investment withdrawal.
According to the Global Times, the State Administration of Foreign Exchange (SAFE) unveiled that the outflow happened when local banks and businesses strongly increased holdings of overseas assets and repaid debts.
SAFE said, "There is an essential difference with the so-called withdrawal of foreign capital."
In the first three quarters of 2015, China's abroad investment surged by $272.7 billion, while deposits in foreign banks and lending to foreign firms went up by $96.9 billion.
SAFE added that the country's overseas net fiscal assets rank second globally, which inevitably trigger capital outflow as long as China maintains its current account surplus.
By the end of last year, China's foreign exchange reserves declined to $3.3 trillion, although it was still the world's largest. The country's huge reserve investments and stable external debt structure can offer strong resistance to effects from capital flows, according to China Daily.
The publication reported that China saw a capital account deficit in Q4 of 2015 after a surplus was registered in the previous quarter. Notably, the deficit under capital and fiscal account stood at $84.3 billion in the Sept.-Dec. period, reversing the surplus of $11.4 billion three months previous, based on the preliminary statistics released by SAFE.
Meanwhile, reverse assets, most of which are foreign exchange, shrank by $115 billion, decreasing further from a drop of $160 billion in Q3 2015.
The country began posting deficits on its capital and fiscal account in Q2 2014 because of rapid increases in overseas investment and speculation on depreciation of the yuan. China reported a current account surplus of $84.3 billion in Q4 2015, increasing from $60.3 billion realized in the third quarter.
For the whole year, the country reported a current account surplus of $293 billion, a capital and fiscal account deficit of $161 billion, and a reserve assets decline of $343 billion.
