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Thursday, July 21, 2016, 22:42

Capital flight eases in first half of year

By Wang Yiqing

China's capital flight pressure has eased in the first half of this year, as statistics released on Thursday by the State Administration of Foreign Exchange indicate.

According to the data, China's net foreign exchange purchase accumulated to US$173.8 billion in the first half of 2016. But its capital outflow significantly slowed down in the April-June period.

After registering 124.8 billion in foreign currency in the first quarter, Chinese banks sold in the second quarter US$49 billion more in foreign currency than they purchased.

The monthly net purchase of foreign exchange declined from US$54.4 billion in January to US$12.5 billion in May and was at US$12.8 billion in June.

"The pressure of cross-border outflow has been gradually eased," Wang Chunying, director of the administration's balance of payments department, said at a news briefing on Thursday.

Wang attributed the stabilization of cross-border capital outflow to the stable macroeconomic and financial environment as well as reasonable market sentiment.

On the one hand, international financial markets have remained stable and the US Federal Reserve has postponed its interest rate hikes. China's economic conditions have remained sound.

However, with the market playing a more important role in deciding the exchange rate of the RMB, market sentiment has become more stable, and market expectations on depreciation of the yuan have gradually receded.

Wang said that until now, the UK's decision to leave the European Union, or the "Brexit", has not had a significant impact on China's cross-border capital flows.

The "Brexit" has caused short-term international market fluctuations, and the long-term impact of Brexit will be a gradual and complicated process, Wang said.

Yan Ling, economist with China Merchants Securities Co, said, "According to some leading indicators, the impact of the 'Brexit', as a black swan event, is yet to appear."

But the foreign exchange authority is of the opinion that the risks of the "Brexit" are controllable.

Wang Yanfei contributed to this story.

wangyiqing@chinadaily.com.cn

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