On October 22, the State Council Information Office held a press conference to announce the foreign exchange inflow and outflow data for the first three quarters of this year. The figures reveal a resurgence in net capital inflows across China’s borders during this period.

According to data on foreign-related payments collected by banks, total foreign-related income reached $525.94 billion, while foreign payments amounted to $525.66 billion, resulting in a surplus of $2.8 billion and signaling a recovery in cross-border capital inflows.

However, during the same timeframe, a noteworthy trade deficit in foreign exchange settled at $121.3 billion. Li Hongyan, deputy director of the State Administration of Foreign Exchange, explained that the overall settlement and sales of foreign exchange exhibited a deficit primarily due to an expansion in the second quarter. Yet, the third quarter turned a corner, returning to a more balanced state, with September showing a restored surplus as the demand for foreign currency purchases stabilized.

The foreign exchange market itself has been quite vibrant, with the domestic renminbi foreign exchange market totaling a trading volume of $30.27 trillion in the first three quarters, reflecting a year-on-year growth of 10.1%. Additionally, foreign exchange reserves have remained relatively stable, with a reported balance of $3.3164 trillion by the end of September, an increase of $78.4 billion since the end of 2023.

Furthermore, the State Administration of Foreign Exchange highlighted that foreign holdings of domestic renminbi bonds are currently at a historic high. The press conference noted that this year, the comprehensive yield on renminbi bonds has remained robust, attracting foreign investors. To date, foreign investments in domestic renminbi bonds have surpassed $640 billion, a historic peak, with central banks and commercial banks being the predominant holders.

Additionally, spurred by the recent upswing in the domestic stock market, net foreign purchases of domestic stocks have seen a significant increase since late September, further enhancing the appetite for renminbi assets.

The percentage of renminbi used in global cross-border transactions is steadily on the rise, marking it as an increasingly attractive option for global investors looking to diversify their asset allocation.