Forging a High-Standard Balance of Payments Regime and Fostering a High-Quality...

Title:Elevating Law-Based Governance and Expectation Management to Safeguard High-Quality Development of Foreign Exchange Administration

CHINA FOREX: Amid the intricate and challenging external environment in 2025, how did China's foreign exchange (FX) market perform overall? What insights and forward-looking views can you share regarding the projected trends of China's FX market in 2026?

ZHAO Yuchao: In 2025, the external environment underwent profound adjustments, with risks and challenges increasing noticeably. Under the strong leadership of the Central Committee of the Communist Party of China (CPC), China pursued high-quality economic development in a solid manner and strengthened macroeconomic policy adjustment and coordination, enabling the domestic economy to withstand pressure while moving toward innovation-driven and quality-oriented growth. The State Administration of Foreign Exchange (SAFE) pursued coordinated development and security, effectively addressed external shocks and challenges, firmly advanced reform and opening-up in the FX sector, continuously enhanced supervisory capabilities in an open environment, and effectively safeguarded the stable operation of the FX market. Overall, China's FX market remained basically stable in 2025, demonstrating strong resilience and vitality.

Firstly, the FX market trading remained active. In 2025, FX market turnover reached US$42.6 trillion, while the total cross-border receipts and payments by enterprises, individuals, and other entities amounted to US$15.6 trillion, both hitting record highs. This reflects the sustained growth in external economic activity, driving steady expansion in the FX market trading.

Secondly, the FX market achieved a basic equilibrium between supply and demand. In 2025, cross-border capital recorded a net inflow of US$302.1 billion, and banks reported a surplus of US$196.6 billion in purchases and sales of FX. From a dynamic perspective, the FX market faced certain outflow pressures at the beginning of the year. Since May 2025, cross-border capital flows have gradually shifted to net inflows, with net inflows speeding up in December. This trend aligns with seasonal factors, as enterprises typically accelerate overseas collections toward year-end and the early days of the following year. Since the start of 2026, net cross-border capital inflows have moderated.

Thirdly, the scale of FX reserves remained broadly stable, and the RMB exchange rate stayed basically stable at a reasonable and balanced level. China's FX reserves reached US$3.36 trillion by the end of 2025. The RMB appreciated by 4.4% against the USD over the year, showing a solid performance globally, with relatively stable exchange rate expectations.

During the 15th Five-Year Plan period, China's development environment will undergo profound and complex changes, with strategic opportunities coexisting alongside risks and challenges. China's domestic economy is underpinned by solid fundamentals, multiple advantages, robust resilience, and substantial potential, and overall economic stability is expected to be maintained. As the first year of the 15th Five-Year Plan, 2026 saw the Central Economic Work Conference emphasize the need to keep the RMB exchange rate generally stable at an adaptive and balanced level and to ensure basic equilibrium in the balance of payments. On the whole, China possesses a relatively solid internal foundation to achieve the aforementioned objectives. Firstly, China is accelerating the building of a new development paradigm, deepening the integration of technological and industrial innovation, and vigorously boosting consumption and expanding effective investment. The momentum of economic stabilization and improvement is expected to continue, which helps consolidate the economic foundation for the stable operation of the FX market. Secondly, China's foreign trade has grown more resilient, with continuous optimization of the trade structure. Coupled with China's proactive expansion of imports, this will drive balanced development of exports and imports. Meanwhile, China is actively advancing high-standard opening-up, fostering new advantages in attracting foreign investment, and effectively implementing outbound investment management, which will further stimulate cross-border two-way investment flows. Thirdly, China's FX trading volume continues to grow, with market depth expanding steadily. The proportion of RMB in cross-border trade and the FX hedging ratio of enterprises have both risen to approximately 30%, reaching record highs. This has strengthened the FX market's capacity to withstand external shocks. From an external perspective, moderate global economic growth and the possibility of continued interest rate cuts by major advanced economies are conducive to international economic and financial stability. However, there remain numerous uncertain and unpredictable risk factors. The SAFE will continue to strengthen cross-border capital flow monitoring, enhance the resilience of the FX market, improve macroprudential management and expectation management, and safeguard the sound operation of the FX market.

CHINA FOREX: Statistical data serve as a core information hub for conducting situational assessment and advancing evidence-based policy improvement. Against this backdrop, could you elaborate on the key tasks implemented for balance of payments statistics throughout 2025, and outline the overarching guiding principles and work approach for 2026?

ZHAO Yuchao: In 2025, the SAFE continued to improve the modernized balance of payments statistical system and strengthen the role of data in supporting decision-making, with the following key tasks undertaken:

High-quality compilation and publication of statistical products to serve macroeconomic analysis and decision-making. The SAFE compiled and published 66 sets of balance of payments statistical data across eight major categories throughout the year, including the balance of payments statement. Together with the Ministry of Commerce and the National Bureau of Statistics, the SAFE released the 2024 Statistical Bulletin of China's Outward FDI. Efforts to strengthen the quality of statistical data were sustained. A total of 76 direct reporting system verifications and manual checks and six special inspections were conducted throughout the year. These covered 14,000 direct reporting entities, 12,000 entities under special surveys, and 6 million indirect reporting entities (individuals), with more than 100 million data entries verified in total.

Comprehensive advancement of statistical system development and continued expansion of the scope of direct reporting entities. The SAFE revised and published the provisions of Statistics on External Financial Assets, Liabilities and Transactions, integrating enterprise reporting rules and incorporating the trade credit statistical survey into direct reporting. The inclusion of key enterprises into direct reporting was orderly and steadily advanced, achieving the target of incorporating 10,000 key enterprises. Accounting methods for international transportation, travel, and related items were studied and improved to objectively reflect developments in China's trade in services. Continuous cooperation on statistics was maintained with the Ministry of Commerce, the General Administration of Customs, and the National Bureau of Statistics.

The SAFE strengthened training and publicity to enhance professional statistical capacity, made coordinated efforts to strengthen the training of statistical personnel at both provincial and municipal branches, and held 12 sessions of training on the Cloud Construction of National Balance of Payments for Youth throughout the year. It also strengthened guidance for financial institutions and non-financial enterprises by conducting eight specialized training sessions for direct reporting entities. A series of long-form graphics and training videos on statistical reporting were released via SAFE's WeChat official account and CHINA FOREX's website. The Case Analysis of Indirect Reporting for Balance of Payments Statistics (2025 Edition) was revised and published, providing dictionary-style guidance to reporting entities through 159 categories of reporting cases.

The SAFE further participated in global statistical cooperation and governance to continuously expand its international influence. The SAFE fulfilled its responsibilities as a member of the IMF Committee on Balance of Payments Statistics and actively participated in the formulation of international standards for the Balance of Payments and International Investment Position Manual, Seventh Edition (BPM7), as well as in th