BEIJING Feb 25 China is likely to see
relatively big net capital inflows this year, though the U.S.
Federal Reserve's tapering of its stimulus programme could help
ease some pressures, the country's foreign exchange regulator
said on Tuesday.
The improved global economic environment in 2014 and China's
efforts to push forward reform will likely to continue to
attract capital inflows, the State Administration of Foreign
Exchange (SAFE) said.
China's central bank and regulators have been trying to
deter waves of hot money inflows which picked up steam last year
as domestic money market rates and bond yields climbed and the
yuan currency continued to slowly appreciate.
The foreign exchange regulator expected that cross-border
capital flows will become more volatile in the coming months.
"Especially when the QE tapering gradually takes effect, the
pace of increases in the funds outstanding for foreign exchange
may ease or even drop," SAFE said on its annual capital flow
oversight report, referring to the Fed's quantitative easing
programme involving massive bond purchases.
China should not underestimate the effects of the U.S.
tapering though China has been so far unaffected by Fed's
withdrawal policy, SAFE said.
China's central bank and commercial banks purchased 272.9
billion yuan ($44.75 billion) worth of foreign exchange on a net
basis in December 2013, the fifth months of net purchases since
August, indicating net capital inflows.
With capital flows remaining volatile, China will strengthen
oversight on cross-border capital flows to prevent potential
risks, it added.
Official figures showed Chinese banks posted a surplus of
1.68 trillion yuan in their foreign exchange settlements in
2013, up 210 percent from the previous year.
China's economy shows signs of slowing from the stellar
growth rates of years past as the government looks to shift the
emphasis to structural reform rather than growth for its own