Latest news with #StateAdministrationofForeignExchange
Nikkei Asia
6 days ago
- Business
- Nikkei Asia
FDI in China shrinks to less than 10% of quarterly peak
Chinese authorities have stepped up surveillance of foreign residents since a 2014 anti-espionage law went into effect. (Photo by Tomoki Mera) KENTARO SHIOZAKI BEIJING -- Foreign direct investment in China was sluggish in the second quarter, with net inflows totaling $8.7 billion, according to balance-of-payments data released Friday by the State Administration of Foreign Exchange.
Business Times
07-08-2025
- Business
- Business Times
Chinese firms sell record amount of currency options in first half of 2025
[SHANGHAI] Chinese companies sold a record amount of currency options in the first half of this year as domestic businesses, particularly exporters, bet on a steady renminbi and used derivatives to make some extra money. The trend is further evidence Chinese exporters are reluctant to convert their foreign exchange receipts back into low-yielding renminbi, despite broad US dollar weakness, but are seeking to hedge against potential currency risks. Broad US dollar weakness has underpinned the renminbi, but domestic economic weakness and lingering trade uncertainty with the US have limited its upside. Commercial banks sold a record US$132.5 billion worth of US dollar/renminbi options January to June on behalf of their clients, official data from the State Administration of Foreign Exchange (Safe) showed. The renminbi strengthened 1.9 per cent against the greenback in that period even though the US dollar index dropped nearly 11 per cent as the central bank anchored the currency. One-month US dollar/renminbi implied volatility is around 2.5 per cent, the lowest since July 2024. The central bank's tight grip over the renminbi, limiting gyrations in either direction, has prompted exporters to take advantage of the low volatility to trade options to enhance returns from their US dollar holdings, traders and analysts said. Some banks recommended 'selling call options' to their corporate clients, two banking sources with direct knowledge of the matter said. By selling into one-year US dollar/renminbi call options with strike prices higher than the current spot level, corporate clients can benefit regardless of how the renminbi moves, one source said. If the spot rate moves higher within 12 months, the option will be exercised, giving the exporter a higher rate. If not, they will collect a premium on the option. REUTERS
Kuwait Times
23-07-2025
- Business
- Kuwait Times
China has conditions to maintain yuan stability: Regulator
BEIJING: China has the conditions to keep the yuan stable, the country's foreign exchange regulator said on Tuesday, even as trade relations with Washington remain uncertain and deflationary pressures continue to weigh on the domestic economy. Li Bin, the deputy head of the State Administration of Foreign Exchange (SAFE), said that the yuan has been trading at reasonable and balanced levels so far this year and had the conditions to remain stable. 'From a policy perspective, China has accumulated rich experiences in counter-cyclical adjustments in the foreign exchange market and has ample reserves of policy tools,' Li said. He added that the regulator's ability to 'prevent and resolve external shocks and risks' had been enhanced. 'We have the confidence and ability to continue to maintain the stable operation of the foreign exchange market,' he said. Overseas investors in general have increased their net holdings of onshore equities and bonds in the second quarter of this year, Li told a press conference in Beijing. He added that supply and demand in the foreign exchange market were basically stable. China's yuan has strengthened about 1.7 percent against the US dollar so far this year. Chinese businesses and investors expect the yuan to remain steady in the near term, a rise in currency swaps and growing foreign exchange deposits suggest they are expecting the yuan to depreciate as US trade tensions drag on. China reported slightly better-than-expected second-quarter gross domestic product (GDP) data last week, though analysts warn that weak demand at home and rising global trade risks will ramp up pressure on Beijing to roll out more stimulus. The 90-day tariff truce agreed by Washington and Beijing during trade talks in Switzerland is due to end on August 12. Official data on Tuesday showed that foreign investors sold China's onshore yuan bonds for the second consecutive month in June. Meanwhile, China's outstanding property loans rose to a two-year high in June, central bank data showed on Tuesday, following a series of policy measures aimed at stabilizing the sector. China's outstanding property loans stood at 53.33 trillion yuan ($7.43 trillion) at the end of June, up 0.4 percent from the same time the previous year, the central bank said in a statement. Growth accelerated from 0.04 percent in March, reaching the highest level since June 2023, according to central bank data. But growth remains modest, dwarfed by the double-digit increases seen before 2021. Outstanding individual mortgage loans came in at 37.74 trillion yuan, down 0.1 percent year-on-year, while outstanding property development loans rose 0.3 percent on the year to 13.81 trillion yuan, the central bank said. Beijing has rolled out multiple rounds of policy measures in recent years to support the property sector, including allowing debt-laden developers to sell housing inventories and undeveloped land to local governments. — Reuters
Qatar Tribune
07-07-2025
- Business
- Qatar Tribune
China urged to take bolder steps to tackle price wars, deflation
Agencies Beijing's latest push to curb price wars may help ease deflationary pressures, but analysts warn the current measures fall short of addressing deeper structural problems facing the world's second-largest economy. China's GDP deflator – a broad measure of prices across goods and services – has been negative since the second quarter of 2023, while consumer prices have fallen for four straight months year-on-year. To stop the deflationary spiral, Chinese authorities should address the cause: weak domestic demand, analysts said. 'So far, attempts to revive inflation by trimming supply and reducing overcapacity have shown limited results,' Miao Yanliang, chief strategist at Beijing-based investment bank China International Capital Corporation (CICC), wrote in a research note. 'Weak demand remains the underlying problem.' Despite policymakers flagging cutthroat competition as a concern at the tone-setting Central Economic Work Conference last December, there are few signs of a rebound in prices, said Miao, who previously worked as a senior economist at the State Administration of Foreign Exchange for a decade. Miao attributed the current deflationary spiral to downturns in the financial and property sectors as well as diminishing income expectations among Chinese households. The warning came as the Chinese economy grapples with persistent structural challenges. Excess capacity across multiple sectors has suppressed both producer and consumer prices, while job insecurity and a prolonged property slump have made households reluctant to spend. China's consumer price index (CPI), a key gauge of inflation, declined for a fourth straight month in May – falling 0.1 per cent year on year, according to the National Bureau of Statistics. The producer price index (PPI) has continued to contract since October 2022. June price data is scheduled for release on week, China's top leadership addressed 'disorderly low-price competition' during a meeting of the Central Financial and Economic Affairs Commission, the Communist Party's highest economic policymaking body. It pledged to cut production capacity in an 'orderly' fashion, though without naming specific industries or targets. Compared to supply-side adjustments, analysts said demand-side stimulus remains the most effective lever for tackling deflation. To break the cycle, the CICC note recommended repairing 'corporate balance sheets' through capital injections, interest subsidies and corporate restructuring. This would help revive investment sentiment and employment, paving the way for a recovery in household income and assets, it added. Miao also called for raising household incomes by stabilising employment, increasing cash flow and strengthening the social safety net to ease consumer concerns and unlock spending potential. Chinese authorities have doubled down on subsidies, including a 300 billion yuan central government trade-in programme this year, to stimulate domestic consumption amid external headwinds. But there are fears the impact could be limited. 'When it comes to boosting consumption, there are few policy tools available to generate substantial traction on the demand side,' Mao Zhenhua, co-director of Renmin University's Institute of Economic Research, told a forum in Hong Kong on risks have been exacerbated by falling investment returns and mounting pressure on income and employment, with external headwinds also weighing on prices, he warned. The trade war with the United States would have 'a lasting impact on China's medium- to long-term economic fundamentals' and could further intensify the country's 'involutionary' dynamics, Mao added – a term used by officials to describe intense and self-defeating domestic competition.
Business Times
01-07-2025
- Business
- Business Times
China raises quota for foreign investment, ending 13-month pause
[BEIJING] China has increased the amount of money that approved investors can put into overseas assets for the first time since May last year as its relaxes its control over capital outflows. The State Administration of Foreign Exchange raised the foreign-exchange quota for qualified domestic institutional investors (QDII) to US$170.9 billion at the end of June, from US$167.8 billion, according to the agency's website. The increase, which the markets had been expecting, comes as depreciation pressure on the yuan has eased due to the weaker US dollar, and demand for foreign assets such as US stocks has cooled. The QDII programme allows local institutional investors who meet certain conditions to buy foreign securities, bonds, and commodities within their prescribed limit. Interest from Chinese investors for overseas assets had surged over the past two years as the local equity market slumped. That demand led to huge distortions in the prices of exchange-traded funds (ETFs) tracking global gauges such as the S&P 500 Index, as demand outpaced the quota-constrained supply. The additional quota allotted to securities firms and fund houses increased by US$2.1 billion, while that for banks rose by US$660 million, and that for insurance companies climbed by US$300 million. Chinese investors' demand for US stocks has eased in recent months as increased government stimulus, the rally fuelled by the Deepseek artificial-intelligence app, and the surge in Hong Kong equities created opportunities closer to home. The amount of money mainland investors have ploughed into Hong Kong shares has climbed to HK$731 billion (S$118 billion) this year, nearing the 2024 record of HK$808 billion. The average premium on ETFs in which qualified investors can place funds was 0.3 per cent on Monday, compared with an average of 1.6 per cent over the previous 52 weeks, based on data compiled by Bloomberg. The premium jumped as high as 3 per cent early last year, leading to trading halts and the imposition of purchasing limits. BLOOMBERG
