China's Cross-Border Capital Outflow Pressure Eases

By Samantha Tan Chiew Ting BEIJING, March 23 (Bernama) -- China's cross-border capital outflow pressure has eased significantly in recent months, reported Xinhua News Agency on Wednesday. China's foreign exchange reserves fell US$28.6 billion in February, down from the decreases of US$107.9 billion in December and US$99.5 billion in January, it quoted Wang Yungui from the State Administration of Foreign Exchange (SAFE). Cross-border capital outflow was down 45 per cent in February month-on-month, while depreciation pressure on the yuan has largely been removed and its value has also gradually stabilised. This shows that cross-border capital outflow from China has moderated, Wang said. China currently has enough tools to cope with capital outflows, and consider new measures such as a Tobin tax or a financial transaction tax, to prevent international currency speculation, said Wang. However, all the new tools must be studied to see if they conform to the Chinese market's actual conditions, he added. Wang also reiterated that there was no basis for the yuan's continuous depreciation, as China's economic fundamentals remain sound with a large trade surplus and increasing foreign direct investment. He said China should strengthen exchange rate expectation management and step up supervision over capital inflows and outflows from the country. "Cross-border capital movement is expected to stabilise some time in the future," another SAFE official, Wang Chunying, was quoted as saying. He said China aims to expand its economy by 6.5 per cent to seven per cent this year, which is a high target, adding its fundamental goal of attracting foreign capital inflows will not be changed. --BERNAMA