China August Cross-Border Inflows Rise as Forex Settlement Reaches $48.5B

Cross-border receipts and payments by China's non-bank sectors reached $1.5 trillion in August, according to data released by the State Administration of Foreign Exchange (SAFE). Net cross-border fund inflows rose 4 percent month on month to $62.4 billion, while commercial banks registered a net foreign exchange settlement surplus of $48.5 billion. Regulators attributed the stability to robust net receipts from goods trade, a seasonal drop in outbound corporate dividend remittances, and stable two-way direct investment, despite a wider services deficit driven by summer travel.

Against a backdrop of heightened volatility in global currency and financial markets, China's sustained cross-border net capital inflows and positive bank forex settlement indicate that domestic foreign exchange supply and demand remain broadly balanced. Anchored corporate expectations and orderly capital movements provide a buffer for macroeconomic stability.

Cross-border receipts and payments conducted by China's non-bank sectors, encompassing enterprises and individuals, totaled $1.5 trillion in August, sustaining steady expansion, according to official data released by the State Administration of Foreign Exchange. Net cross-border capital inflows reached $62.4 billion during the month, representing a 4 percent increase from July, official figures reported by Xinhua showed. Li Bin, deputy director and spokesperson for SAFE, noted that capital movements remained stable across primary transaction channels. Net capital inflows under merchandise trade remained elevated. At the same time, summer travel and study abroad lifted the services trade deficit by 6 percent month on month. This seasonal deficit expansion was countered by a 23 percent sequential decline in outbound dividend and profit distributions by foreign-invested companies, which retreated from their typical mid-year peak. Cross-border two-way direct investment remained largely steady. Domestic foreign exchange trading also maintained strong liquidity. Total transaction volume across onshore foreign exchange markets reached $3.9 trillion in August. Commercial banks posted a net foreign exchange settlement and sales surplus of $48.5 billion, primarily driven by net cross-border inflows of foreign exchange. Corporate currency conversion patterns indicated balanced sentiment. The foreign exchange settlement ratio—the proportion of foreign currency earnings that enterprises chose to convert into yuan—stood at 61.5 percent in August. That figure was 2.7 percentage points below the average recorded over the first seven months of the year, signaling that enterprises were willing to both settle and hold foreign currency in an orderly manner without destabilizing market equilibrium.