China's robust economic growth helped generate substantial foreign exchange surpluses last year, bolstering its international balance of payment in the context of an adverse global economic climate.
"Our international balance of payments continues to maintain its robust momentum," Guo Shuqing, director of the State Administration of Foreign Exchange (SAFE), said yesterday.
The annual growth in foreign exchange reserves registered an all-time high of US$46.6 billion last year; and banks reported across-the-board surpluses for the first time since 1994, under all of the trade, non-trade and capital accounts in their transactions with importers and exporters.
Chinese trading firms are required to sell foreign exchange earnings to banks and can buy foreign currency from them when needed.
In a further sign of the continuing momentum, Chinese banks' forex surpluses soared by 26 percent in the first four months of the year, the administration said in a news release.
The prime cause for the vibrant forex growth was China's 7.3 percent economic growth last year and the world's increased confidence in the country's economic prospects, Guo said.
A wave of interest rate cuts in the international market last year brought overseas rate levels lower than those in China, removing the need for foreign exchange-related arbitrage, he said.
But the senior official cautioned against certain abnormalities in the flow of foreign exchange and underlined the need for supervision of short-term capital flow.
Guo said China's foreign exchange regulators still face a number of challenges this year as the dicey world economic outlook has magnified uncertainties in exchange rates of major currencies and this is the country's first full year in the World Trade Organization.
(China Daily May 22, 2002 )