SAFE denies intense capital outflow

Updated: 2013-08-17 09:40

(Xinhua)

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In the January-July period, forex purchases stood at $1.06 trillion, with sales of $930.6 billion, representing a surplus of $131.5 billion.

Foreign capital flowed into China in massive volume from October 2012 to April 2013 amid ample global liquidity and heightened expectations for the yuan's appreciation.

During the January-April period, banks registered a monthly average surplus of $32.1 billion in their forex transactions.

However, forex inflows have been slowing since May, when Chinese regulatory authorities increased supervision over capital flows, including stricter checks on mismatches between cargo and cash, to crack down on speculation.

Analysts said there is no need to worry about the short-term outflow of foreign capital and its impact, as Chinese authorities faced the same problem last year and successfully overcame its impact.

Zhang Ming, an international investment researcher with the Chinese Academy of Social Sciences, said the central government will likely resort to open market operations to meet the market demand for liquidity.

"If the short-term foreign capital outflow expands and the economy slides beyond expectations, we cannot exclude the possibility of a cut in the reserve requirement ratio for banks," Zhang said.

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