China studies likely risks to forex reserves
Print Edition
CHINA is looking into possible risks to its foreign exchange reserves as outbound investment has eclipsed foreign investment inflows, a spokesman for the Ministry of Commerce said yesterday.
Rapid rises in outbound direct investment have fanned concerns over increased pressure on China’s foreign exchange reserves and external payments, Shen Danyang told a scheduled briefing.
“We are studying whether this will create certain short-term risks, and considering whether we should take some targeted regulatory measures to control risks,” he said.
The rapid increase in outbound investment was normal, Shen said, dismissing concerns that such gains would intensify the outflow of capital.
The government has been encouraging local firms to invest overseas under China’s Belt and Road initiative.
China’s outbound investment would exceed foreign direct investment in the country this year, Shen said.
China’s non-financial ODI jumped 61.9 percent in the first five months of this year from the same period a year earlier, to 479.26 billion yuan (US$72.7 billion), the ministry said.
By comparison, FDI inflows rose 3.8 percent to 343.55 billion yuan in the January-May period.
The ministry started releasing yuan-denominated FDI and ODI data in early 2015.
Non-financial ODI grew an annual 14.7 percent in 2015 to US$118.02 billion, while FDI rose 6.4 percent last year to US$126.3 billion, earlier data showed.
Heavy capital outflows seen since last year seem to have subsided as the yuan steadied, though the more recent weakening of the yuan has put outflows back on the radar.
China’s foreign exchange reserves fell by US$27.9 billion in May to US$3.19 trillion, their lowest since December 2011.
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