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People's Daily Online>>China Business

SAFE: Prevent abnormal cross-border capital flows

(People's Daily)

16:25, February 10, 2012

Edited and translated by People's Daily Online

The State Administration of Foreign Exchange (SAFE) recently answered a series of questions from the People’s Daily Online’s registered users, including “How will China cope with a large-scale withdrawal of hot money,” “How can a person planning on moving abroad transfer his assets,” “How effective is the crackdown on illegal cross-border capital flows,” “How to ensure adequate foreign exchange gains in the current international situation,” and “What measures have been taken to protect small and medium-sized enterprises against currency risks.”

Question: How will the hot money withdrawal affect China’s economy? How will China cope with it?

SAFE: Although the pace of net capital inflows has slowed, there are no signs of heavy capital outflows in China. The recent changes in foreign capital flows were in line with the country’s macro-economic control targets, and showed that its policy for reducing the surplus and promoting balanced trade was paying off.

The changes have done more good than harm, as they have helped achieve a balance of international payments, enhanced the effectiveness of macro-control measures, weakened the expectations of yuan appreciation, and reduced the pressure from foreign protectionism.

The SAFE will accelerate the transformation of its ideas and methods for managing foreign exchange, actively promote trade and investment facilitation, strengthen monitoring and early warning of cross-border capital flows, improve the country’s balance-of-payments situation, prevent and defuse risks of abnormal cross-border capital flows, and protect the country’s economic and financial safety.

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