Outflow of capital less than feared, analysts say

Qiu Gaoqin, a senior financial analyst at Bank of Communications Ltd, said: "Yuan holdings for foreign exchange purchases showed greater volatility this year. We believe in 2013 the holdings will increase to a greater extent than this year, as the yuan fluctuates to a small extent in both directions."

Peng Xingyun, a senior financial researcher at the Chinese Academy of Social Sciences, said China's slower economic growth and reduced expectations of yuan appreciation will lead to individuals and enterprises holding more foreign exchange and generate more cross-border capital outflows.

"As a result, the central bank will be more willing to use foreign exchange reserves to intervene in the foreign exchange market, which will result in the slower growth of foreign reserves. Maybe we will see some declines in foreign reserves in 2013," said Peng.

China's total foreign debt fell to $770.8 billion at the end of September from $785.2 billion at the end of June, the administration said on Thursday.

Short-term debt, a gauge of hot money inflows, dropped to $572.8 billion at the end of September from $588.2 billion at the end of June, it said.

The administration also adjusted the third-quarter current account surplus to $70.8 billion from the previous figure of $70.6 billion.

Commodity trade registered a surplus of $102.9 billion, while service trade saw a deficit of $29.7 billion.

China's current account surplus amounted to $148 billion in the first nine months of 2012, while its capital and financial account deficit stood at $36.8 billion.

Louis Kuijs, chief China economist at the Royal Bank of Scotland Group, forecast a rise in the current account surplus to 3.6 percent of GDP in 2012 and 3.9 percent of GDP in 2013.

"Since we believe real economy considerations remain paramount in the setting of financial policies, we expect the pressures to lead to continued heavy management of the exchange rate," he said.

wangxiaotian@chinadaily.com.cn

 

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