China's foreign exchange market remains stable in Q1 with strong net inflow of funds

China's foreign exchange market remained stable in the first quarter of 2025, with a strong net inflow of cross-border funds driven by robust goods trade and foreign capital investments, according to data released by the State Administration of Foreign Exchange (SAFE) on Tuesday.

In the first quarter, non-bank sectors, including enterprises and individuals, saw a net inflow of 51.7 billion U.S. dollars, a relatively high level historically. The inflow from goods trade reached 206.3 billion U.S. dollars, reflecting a 120 percent year-on-year increase.

Additionally, from February to March, foreign capital increased its holdings of domestic bonds by 26.9 billion U.S. dollars, an 84 percent rise compared to the previous year. The momentum continued through April 1 to 18, with net bond purchases reaching 33.2 billion U.S. dollars.

SAFE attributed fluctuations in international financial markets to U.S. protectionist actions, including the imposition of "reciprocal tariffs" on April 3. Despite initial depreciation, the RMB against the U.S. dollar later appreciated, stabilizing near pre-tariff levels, reflecting a normal market response influenced by economic fundamentals.

"From the perspective of balance of payments, the trade surplus in goods has remained above 200 billion U.S. dollars for three consecutive quarters. In terms of capital flows, overseas investments have increasingly accelerated the purchasing of Chinese bonds. As for foreign exchange transactions, the RMB exchange rate has exhibited two-way fluctuations, both appreciating and depreciating, with the current trading price near the level seen at the start of the year, maintaining a generally stable central point," said Li Liuyang, chief foreign exchange analyst at China International Capital Corporation.

SAFE reiterated its commitment to policies that support cross-border trade and investment, aiming to enhance China’s ability to manage exchange rate fluctuations and external shocks.

In the first quarter, the proportion of RMB cross-border receipts and payments under goods trade, as well as the corporate foreign exchange hedging ratio, both increased compared to the previous year, indicating an enhanced ability of enterprises to cope with exchange rate fluctuations.

Looking ahead, SAFE plans to further monitor the foreign exchange situation, maintain exchange rate flexibility, and use exchange rate adjustments as stabilizers for macroeconomic balance and the balance of payments.

"The data from the first quarter underscores the strong resilience of China's export-driven economy. China holds a core competitive advantage amid external uncertainties, and the ability of its foreign exchange market to withstand external risks continues to strengthen," said Zhang Di, chief macro analyst at China Galaxy Securities.

China's foreign exchange market remains stable in Q1 with strong net inflow of funds

Chinese navy vessel Xuchang opened to the public at the sideline of the International Maritime Defense Exhibition (IMDEX) Asia 2025 in Singapore on Thursday, receiving more than 1,000 visitors boarding the ship docked at Changi Naval Base.

It was also the closing day of IMDEX Asia 2025, one of the most influential defense events in Asia which opened on Tuesday at the Changi Exhibition Center. China has participated in the exhibition for many consecutive sessions.

This edition of the exhibition attracted more than 100 companies from around the world, focusing on displaying the latest maritime sci-tech achievements in artificial intelligence technology, ship power systems and other aspects.

The Type 054A missile frigate Xuchang and Type 082II minesweeper Chishui - both domestically developed - starred as China's floating ambassadors at the exhibition.

More than 1,000 visitors, including overseas Chinese and foreign military personnel, streamed across their decks during guided tours that blended hardware displays with cultural diplomacy.

Aboard the 4,000-ton Xuchang, sailors carefully orchestrated visits from stern to bow, explaining the history of the People's Liberation Army Navy between displays of missile systems and radar equipment.

"It is my first time here, and I feel overwhelmed. It is much larger than what I imagined. And I see many kinds of weapons, none of them I've ever seen before," said a Chinese student in Singapore.

At a deck reception on Thursday evening, sailors on frigate Xuchang put on performance costumes and played Zheng, a 21-or 25-stringed plucked instrument, did Tai Chi and displayed face-changing of Sichuan Opera.

"I experienced a lot of diversity in cultural stuff, and it's very fortunate to come," said a Singaporean naval soldier.

"It's great, I think. I thank you for your colleagues and your welcoming. So I think it's great, I made a few friends on board the ship here. Because I'm Chinese myself, I kind of like the culture," said another seaman from Singapore.

From Tuesday to Thursday, the Chinese Navy participated in various activities organized by the host, including the opening ceremony, a welcome reception, and professional exchanges.

Through friendly and open interactions, the visiting Chinese naval soldiers impressed the local people as opening, cooperative, and confident.

Xuchang, with the hull number 536, is a Type 054A guided missile frigate developed domestically by China with a full load displacement of over 4,000 tons. It is capable of carrying out sea assault, air defense and anti-missile missions. Since it was commissioned in 2017, the ship has participated in a number of major training and exercise missions and maritime escort operations.

Chinese frigate opens to public at Singapore exhibition