China continues to see forex settlement deficit

BEIJING - China continued to see a foreign exchange settlement deficit in September, indicating forex had flowed out of the country at the retail level.

Chinese banks sold $232.1 billion worth of foreign currencies to individuals and institutions, and bought $122.9 billion from them, resulting in a net sale of $109.2 billion last month, the State Administration of Foreign Exchange (SAFE) said on Thursday.

The forex settlement deficit came in at $301.5 billion in the first three quarters of 2015.

In the third quarter this year, the forex settlement deficit stood at $196.1 billion, widening from $13.9 billion in the second quarter.

China has weathered some capital outflow so far this year but such capital outflow does not mean capital flight, Wang Xiaoyi, SAFE deputy head, told a press conference, adding that the net-capital outflow was about $200 billion in the first half.

China is confident it can maintain the long-term stability of international balance of payment in the future given its sound economic fundamentals and development potentials, he said.

Wang said it was true that China's foreign exchange reserves have declined but it was controllable, and that the volatility must be viewed rationally.

The administration said it will not control the lawful trade of foreign currencies, but it will crack down on illicit activities.

By the end of last month, the stockpile of foreign exchange reserves stood at $3.51 trillion, compared with $3.84 trillion by the end of 2014.