On July 22, the State Council Information Office held a press conference on the foreign exchange revenue and expenditure data for the first half of 2025. Li Bin, Deputy Director of the State Administration of Foreign Exchange, stated in response to a question from a reporter from China Securities Journal that since the beginning of this year, the foreign exchange situation has been complex and volatile, and risks and challenges have significantly increased. Faced with external shocks, China's foreign exchange market has withstood pressure, operated smoothly, and demonstrated strong resilience. Overall, various types of investment in China are improving. From January to May, the net inflow of equity based direct investment in China was 31.1 billion US dollars, a year-on-year increase of 16%; The net inflow of securities investment in China was about 33 billion US dollars, reversing the net outflow trend in the second half of last year. Jia Ning, Director of the International Balance of Payments Department of the State Administration of Foreign Exchange, introduced that foreign investment in domestic stocks has generally improved recently. In the first half of the year, foreign investment increased its net holdings of domestic stocks and funds by 10.1 billion US dollars, reversing the overall net reduction trend of the past two years. Especially in May and June, the net increase in holdings increased to $18.8 billion, indicating an increased willingness of global capital to allocate to domestic stock markets. Li Bin stated that since 2025, the external environment has become increasingly complex and volatile, with unilateralism and protectionism rising, global economic and cross-border trade growth momentum weakening, and international financial market volatility increasing. China is accelerating the implementation of more proactive macro policies, focusing on expanding domestic demand and effectively responding to external challenges. The overall economic operation is stable and steady, with continuous consolidation of high-quality development. The foreign exchange market operates smoothly, demonstrating strong resilience and vitality, and outperforms market expectations. When answering a question from a reporter from China Securities Journal, Li Bin said that the RMB exchange rate remains basically stable. In the first half of this year, the exchange rate of the Chinese yuan against the US dollar appreciated by 1.9%. The exchange rate of the Chinese yuan against the US dollar fluctuated in both directions between 7.15 and 7.35, maintaining basic stability at a reasonable equilibrium level and playing a role in regulating macroeconomic and international balance of payments automatic stabilizers. The foreign exchange market is expected to remain stable. Li Bin said that from the perspective of foreign exchange market indicators such as forwards and options, there is currently no significant unilateral expectation of RMB appreciation or depreciation in the market. Market transactions are rational and orderly, and when the renminbi weakens, corporate entities increase their foreign exchange settlements due to high exchange rates; When the Chinese yuan strengthens, companies increase their buying of foreign exchange at low prices, and overall, there is no irrational trading behavior such as chasing after the rise and killing the fall. The international balance of payments remains basically balanced. Li Bin stated that since the beginning of this year, China's current account surplus has been steadily increasing, and overall it is at a reasonable and balanced level. Correspondingly to the current account surplus, non reserve financial accounts show a deficit, roughly equivalent in size to the current account surplus, and the international balance of payments presents a self balancing pattern. All types of investments in China are generally improving. From January to May, the net inflow of equity based direct investment in China was 31.1 billion US dollars, a year-on-year increase of 16%; The net inflow of securities investment in China was about 33 billion US dollars, reversing the net outflow trend in the second half of last year. The orderly promotion of outward investment. From January to May, equity based outward direct investment was 51.9 billion US dollars, basically unchanged year-on-year, while outward securities investment remained active. In terms of cross-border capital inflows, Li Bin introduced that in the first half of the year, non bank sectors such as enterprises and individuals had a net inflow of 127.3 billion US dollars, continuing the net inflow trend since the second half of last year. Among them, the net inflow in the second quarter increased by 46% month on month. Looking at the sub items, the net inflow of goods trade remained high in the first half of the year, and foreign investment overall increased its holdings of domestic stocks and bonds. The service trade and profit outflow of foreign-funded enterprises remained stable and orderly. Foreign investment in domestic stocks is generally favorable for foreign investment in RMB assets. Jia Ning, Director of the International Balance of Payments Department of the State Administration of Foreign Exchange, introduced that since 2025, the overall allocation of RMB assets by foreign investment has been relatively stable. The scale of foreign investment in RMB bonds has increased, and currently the stock of domestic RMB bonds held by foreign investors exceeds 600 billion US dollars, which is at a historically high level. Recently, foreign investment in domestic stocks has generally improved, with a net increase of 10.1 billion US dollars in foreign holdings of domestic stocks and funds in the first half of the year, reversing the overall net reduction trend of the past two years. Especially in May and June, the net increase in holdings increased to $18.8 billion, indicating an increased willingness of global capital to allocate to domestic stock markets. We judge that the future allocation of RMB assets by foreign capital still has relatively stable and sustainable growth potential. ”Jia Ning said that currently, the market value of domestic bonds and stocks held by foreign investors accounts for 3% -4%. Supported by multiple positive factors, it is expected that foreign investment will gradually increase the allocation of RMB assets. Jia Ning further analyzed that the stable economic fundamentals have created a stable macro environment for foreign investment in China. With the effectiveness of the policy of expanding domestic demand becoming apparent, the stable and positive trend of the economy is expected to be further consolidated. Recently, several international investment banks have expressed optimism about China's development opportunities and have upgraded their asset ratings from neutral to over rated. The high-quality development of the financial market has created a favorable policy environment for foreign investment in China. ”Jia Ning stated that China adheres to high-level opening up to the outside world, continuously improves the interconnection mechanism of financial markets, expands investment channels, optimizes the investment environment, and significantly improves the convenience of foreign investment in China's financial market. At the same time, China has established a relatively complete and deep financial market system, with the market value of bonds and stocks ranking second in the world. The financial products are abundant and have strong liquidity, providing diversified options for foreign investment to allocate RMB assets. The demand for diversified global asset allocation has created favorable development opportunities for foreign investment in China. Jia Ning believes that in recent years, the volatility of the international financial market has increased, and investors generally believe that it is necessary to carry out more diversified and diversified asset allocation globally. The stable value of the Renminbi and the relatively independent return performance of Renminbi assets worldwide have become important assets for global investors to diversify risks and important allocation targets for increasing returns. According to a recent survey conducted by the official forum of international monetary and financial institutions on 75 central banks worldwide, 30% of central banks have stated that they will increase their allocation of RMB assets. Regarding the trend of China's foreign exchange market in the second half of the year, Li Bin stated that under open conditions, a country's foreign exchange market will be influenced by multiple internal and external factors. Overall, the three favorable factors of high-quality economic development, steady progress in opening up to the outside world, and continuously enhancing the resilience of the foreign exchange market will support the continued stable operation of China's foreign exchange market, and the RMB exchange rate will maintain basic stability at a reasonable and balanced level, "said Li Bin. Li Bin stated that China's economic fundamentals are stable, and the foreign exchange market has a solid foundation for stable operation. In the first half of this year, China's gross domestic product (GDP) grew by 5.3% year-on-year, and the economic structure was further optimized. The contribution of domestic demand, including final consumption and total capital formation, to domestic economic growth in the second quarter was 77%, an increase of 17 percentage points compared to the previous quarter. China regards expanding domestic demand as a long-term strategy, continuously promoting the integration of technological innovation and industrial innovation, and maintaining a stable and positive domestic economy, which will provide solid support for the stable operation of the foreign exchange market. China continues to expand its high-level opening-up to the outside world, and the pattern of independent balance of international payments is stable. Li Bin stated that China adheres to upholding free trade and multilateralism, with economic and trade cooperation partners spread across more than 150 countries and regions around the world. At the same time, high-level institutional opening-up will steadily advance, and the two-way investment and financing channels in the financial market will continue to expand, which will help promote the coordinated development of foreign trade and cross-border investment, and promote the balanced flow of cross-border funds. The resilience of China's foreign exchange market continues to improve, and its ability to cope with external shocks has been enhanced. Li Bin believes that from a macro perspective, the market-oriented formation mechanism of the RMB exchange rate is constantly improving, and the exchange rate elasticity is enhanced, which can timely release external pressure and promote supply-demand balance. From a micro perspective, the awareness of enterprise exchange rate risk neutrality continues to improve, and the cross-border transactions of RMB have steadily increased. In the first half of the year, the foreign exchange hedging ratio of enterprises and the proportion of RMB cross-border income and expenditure under goods trade reached around 30%, both of which are historical highs. Reducing foreign exchange risk exposure helps the market maintain rational trading. From a policy perspective, the foreign exchange market has accumulated rich experience in countercyclical adjustment and has abundant reserves of policy tools. The regulatory efficiency in the foreign exchange field has steadily improved, and the ability to prevent and resolve external shock risks has been continuously enhanced. (New Society)