Reporter: Xiao Shiqing Editor: Chen Xu
On March 25, the State Administration of Foreign Exchange released the “2021 China’s Balance of Payments Report” (hereinafter referred to as the “Report”), and also announced the 2021 foreign debt data.
The “Report” pointed out that in 2021, my country’s balance of payments will continue to be basically balanced, and foreign exchange reserves will remain stable at around US$3.2 trillion. The current account surplus was US$317.3 billion, with a ratio of 1.8% to the gross domestic product (GDP), which continued to be in a reasonable and balanced range.
In terms of external debt data, as of the end of 2021, my country’s full-scale (including domestic and foreign currency) foreign debt balance was US$2,746.6 billion, an increase of US$50.1 billion or 1.8% over the end of September 2021. The increase in external debt was mainly due to the continuous increase in holdings of domestic RMB bonds by foreign investors.
Wang Chunying, deputy director of the State Administration of Foreign Exchange and spokesperson, said that the current new crown pneumonia epidemic is still spreading around the world, and the external environment has become more complex, severe and uncertain. my country adheres to the principle of maintaining stability and seeking progress while maintaining stability, the national economy has continued to recover steadily, and the two-way opening of the financial market has steadily advanced. It is expected that my country’s external debt will continue to maintain a stable operation.
The central parity rate of the RMB against the US dollar appreciates by 2.3% from the end of 2020
The “Report” shows that in 2021, my country’s current account will have a surplus of US$317.3 billion, with a ratio of 1.8% to the gross domestic product (GDP), which will continue to be in a reasonable and balanced range.
The main structure of my country’s balance of payments
Data source: State Administration of Foreign Exchange
Among them, the surplus in trade in goods further increased, reflecting the relative advantages of my country’s industrial chain and supply chain under the epidemic; affected by the epidemic, the deficit in trade in services remained low. Cross-border two-way investment and financing remained active, with a surplus of US$38.2 billion in the non-reserve financial account.
The “Report” pointed out that my country’s direct investment surplus is at a high level, mainly because foreign capital continues to be optimistic about the good development potential of China’s market and economy; two-way transactions in securities investment are active and the surplus continues, indicating that my country’s financial market is gradually opening to the outside world, and RMB assets are more attractive to foreign capital. ; Other investments are in deficit, mainly due to the increase in external deposits and loans by domestic entities.
In terms of the RMB exchange rate, the “Report” shows that the RMB exchange rate against the US dollar is generally stable in two-way fluctuations. At the end of 2021, the central parity rate of the RMB against the U.S. dollar was 6.3757 yuan per U.S. dollar, an appreciation of 2.3% from the end of 2020. The spot transaction prices in the domestic market (CNY) and overseas market (CNH) appreciated by 2.7% and 2.2% accumulatively. The domestic and overseas markets maintained a narrow spread, with an average daily spread of 58 basis points, lower than the average daily spread in 2020 (94 basis points).
The “Report” shows that the exchange rate fluctuated significantly in both directions during the year, ranging from January to March, appreciated from April to May, and depreciated from June to August. The exchange rate of RMB against the U.S. dollar remained basically stable at a reasonable and balanced level throughout the year, becoming one of the few currencies that remained stable against the U.S. dollar.
Data show that by the end of 2021, my country’s external financial assets and liabilities will increase by 5% and 11% respectively compared with the end of 2020, and its external net assets will be US$2.0 trillion.
The “Report” emphasizes that in 2022, global economic growth will slow down, the monetary policies of major developed economies will continue to adjust, and there will be many unstable and uncertain factors in the external environment. However, my country’s economic operation will remain within a reasonable range, the reform and opening up of the financial market will be steadily advanced, and the maturity of the foreign exchange market will continue to improve, which will help my country to maintain a basic balance of international payments. It is expected that the current account will maintain a reasonable surplus pattern, and cross-border capital flows will remain stable. sequential development.
The foreign exchange administration department will adhere to the principle of keeping stability at the forefront and seek progress while maintaining stability, implement the new development concept, build a new development pattern, coordinate development and security, deepen the reform and opening up in the foreign exchange field, maintain the stable operation of the foreign exchange market, and create a favorable environment for the stable development of the domestic economy.
External debt risks are generally controllable
The 2021 foreign debt data released by the foreign exchange bureau at the same time shows that as of the end of 2021, my country’s full-scale (including domestic and foreign currency) foreign debt balance is 2,746.6 billion US dollars, an increase of 50.1 billion US dollars or 1.8% over the end of September 2021. The increase in external debt was mainly due to the continuous increase in holdings of domestic RMB bonds by foreign investors.
In this regard, Wang Chunying said that my country’s external debt structure has been further optimized. From the perspective of the currency structure of foreign debts, at the end of 2021, the proportion of foreign debts in local currency accounted for 45% of my country’s full-scale foreign debts, an increase of 1 percentage point from the end of September 2021. The increase in the proportion of foreign debts in local currency will help reduce the currency error of my country’s external debts. match risk.
From the perspective of the maturity structure of external debt, at the end of 2021, the balance of medium and long-term external debt accounted for 47% of my country’s full-scale external debt, which was the same as that at the end of September 2021.
“The growth of foreign debt is mainly due to the continuous strengthening of my country’s economic strength and the continuous expansion of opening up.” Wang Chunying pointed out that in 2021, my country’s gross domestic product (GDP) will increase by 8.1% year-on-year, and the economic growth rate will be among the best in the world‘s major economies. The total amount exceeded 110 trillion yuan, ranking second in the world; the scale of foreign investment reached a new high, and the actual use of foreign capital was 1,149.4 billion yuan, a year-on-year increase of 14.9%; the volume of trade in goods increased in quality, and the total import and export of goods was 39.1 trillion yuan. RMB, a year-on-year increase of 21.4%.
Wang Chunying emphasized that my country’s foreign debt risks are generally controllable. At the end of 2021, my country’s external debt debt ratio (the ratio of external debt balance to GDP) was 15.5%, the debt ratio (the ratio of external debt balance to trade and export revenue) was 77.3%, and the debt service ratio (the ratio of external debt service and trade and export revenue) was 77.3%. The ratio of export earnings) was 5.9%, and the ratio of short-term external debt to foreign exchange reserves was 44.5%. The above indicators are all within the internationally recognized safety line (respectively 20%, 100%, 20% and 100%), and my country’s external debt risks are generally controllable.
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