National foreign exchange management: my country’s foreign debt scale grew steadily in the first quarter of 2021, mainly driven by foreign investors’ increased holdings of domestic RMB bonds, etc.

Zhitong Finance APP learned that the State Administration of Foreign Exchange has recently released data on foreign debt at the end of March 2021. Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, answered reporters’ questions on related issues. Wang Chunying said that as of the end of March 2021, the balance of my country’s full-caliber (including domestic and foreign currencies) foreign debt was US$2.526.6 billion, an increase of US$125.8 billion or 5% from the end of 2020.

The following is the full text:

Q: What is my foreign debt situation in the first quarter of 2021?

Answer: In the first quarter of 2021, my country’s foreign debt has grown steadily. As of the end of March 2021, the balance of my country’s full-caliber (including domestic and foreign currencies) foreign debt was US$2.526.6 billion, an increase of US$125.8 billion or 5% from the end of 2020. The growth of foreign debt was mainly driven by foreign investors’ increased holdings of domestic RMB bonds.

The structure of foreign debt was further optimized. From the perspective of the currency structure of foreign debt, domestic currency foreign debt accounted for 43%, an increase of 1 percentage point from the end of 2020; from the perspective of the maturity structure of foreign debt, medium and long-term foreign debt accounted for 45%, the same as at the end of 2020.

Question: How do you view the current situation of my country’s foreign debt?

Answer: The steady growth of my country’s economy is the basis for the steady increase in the scale of foreign debt. In the first quarter of 2021, my country’s economy is off to a good start, with GDP increasing by 18.3% year-on-year, and the balance of payments and foreign exchange markets are operating steadily. These factors are the basis for the steady growth of the scale of foreign debt. In the first quarter of 2021, foreign investors continued to increase their holdings of renminbi bonds, reflecting the opening up of the domestic bond market and investors’ confidence in my country’s economic development prospects. Foreign investors are mainly institutions such as foreign central banks and sovereign wealth funds, which tend to allocate RMB assets in the medium and long term, and their investment stability is relatively good.

It is expected that the scale of foreign debt will continue to be stable in the future. The current global epidemic situation is still severe and the world economic recovery is divided, but my country’s economy has maintained a stable recovery, and the fundamentals of the long-term economic improvement have not changed. It is expected that the scale of foreign debt will continue to be stable in the future. The SAFE will continue to serve the real economy and continue to improve the level of liberalization and facilitation of cross-border trade investment and financing. At the same time, the two integrated management framework of “macro prudence + micro regulation” in the foreign exchange market has been continuously improved, and market entities have been actively guided to establish a “except exchange rate risk neutral concept” to effectively prevent cross-border financing risks.