The State Administration of Foreign Exchange (SAFE) has recently released the data on external debt at the end of September 2022. The SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on relevant issues.

Q: Could you brief us on China’s external debt in the third quarter of 2022?

A: In the third quarter of 2022, the scale of China’s external debt dropped and its structure remained basically stable. By the end of September 2022, the total outstanding external debt (including domestic and foreign currencies) reached USD 2.4815 trillion, representing a decrease of USD 154.5 billion or 6% from the end of June this year. To be more specific, the factor of exchange rate contributed roughly 41% to the decline in outstanding foreign debt. With respect to currency structures, the external debt in domestic currency accounted for 44% of China’s total external debt, basically the same as at the end of June 2022. In terms of maturity structure, the medium-and-long-term external debt accounted for 45%, down by 1 percentage point from the end of June 2022.
Q: What would you say about current China’s external debt situations?

A: The decline in the scale of China’s external debt was due to multiple factors in the domestic and international situations. Since the second quarter, under the impact of factors such as the Fed’s interest rate hike, high global inflation, and the epidemic, China’s external debt has dropped. Specifically, other than the USD 63 billion decrease in the external debt due to exchange rate translation, the external debt of loans, currencies and deposits, debt securities, trade credit and advance payments, as well as other debt liabilities decreased by USD 91.5 billion.

The overall scale of China’s external debt will remain stable. Despite the turbulent external environment and its greater impact on China’s economy, it is still possible for China’s external debt to remain stable in the total amount and in an optimized structure, considering the fact that China maintains strong resilience, great potential, and great vitality in its economy and various policy measures continue to show good results. At the same time, the continuous optimization of cross-border financing policies will also better meet the financing needs of market players. In October 2022, SAFE and the PBC raised the macro-prudential parameters for cross-border financing, further expanding the borrowing capacity of domestic institutions. In November, SAFE and the PBC further facilitated fund management for overseas institutional investors to invest in China’s bond market, making China’s bond market an attractive destination for overseas institutional investors. SAFE will continue to promote the facilitation of cross-border investment and financing to serve the high-quality development of the real economy.