UPDATE 2-China says FX reserves ample, has plan to deal with outflows

* China has contingency plans to handle outflows - SAFE
    * Banks' net forex sales highest since Jan 2016
    * Forex reserves ample, will fluctuate in reasonable range -

 (Recast, adds comments from regulator on outflows and reserves)
    By Kevin Yao
    BEIJING, Jan 19 (Reuters) - China's foreign exchange
regulator said on Thursday the country's forex reserves were
ample and it has plans to deal with cross-border capital flows,
even as bank forex sales in December climbed to their highest in
nearly a year.
    "In the future, we believe China's foreign exchange reserves
have conditions to fluctuate up or down within a reasonable
range," State Administration of Foreign Exchange (SAFE)
spokeswoman Wang Chunying said at a news briefing.
    China's foreign currency reserves, by far the world's
largest, fell almost $330 billion in 2016 to end the year at
just over $3 trillion as authorities struggled to stem capital
outflows and shore up the yuan. 
    Chinese banks' net sales of foreign currency rose in
December to their highest since January 2016, according to SAFE
data released on Thursday, indicating capital outflows remained
strong as the yuan hit lows not seen in eight years. 
    Commercial banks' net sales of foreign currency totalled
$46.3 billion in December, compared with net sales of $33.4
billion in November, data showed. Net sales were $54.4 billion
in January 2016. 
    For the January to December period, net forex sales stood at
$337.7 billion, down from $465.9 billion net sales in 2015, SAFE
said in a statement on its website. 
    Pressure on cross-border capital outflows eased somewhat in
2016, SAFE spokeswoman Wang said, adding that SAFE has existing
contingency plans to deal with capital outflows.
    "When the pressure is big from inflows and when the pressure
is big from outflows, we have a series of contingency plans...
Even if we have plans, we will conduct prudent assessment before
we implement them," said Wang. 
    China holdings of U.S. Treasury debt in November fell the
most since December 2011 to $1.049 trillion, according to data
from the U.S. Treasury Department on Wednesday. 
    The pace of China's selling of Treasuries is unprecedented.
Over the six months through November, China had shed $194.66
billion of Treasuries and over the previous 12 months, had sold
$215.11 billion. Both are records.
    SAFE is closely watching the impact from the U.S. Federal
Reserve's expected rate hikes and the dollar's strengthening,
Wang said.
    The yuan fell around 6.5 percent against the dollar in 2016,
the biggest annual drop since 1994, and expectations for further
weakening remain high in the face of a strong dollar.
    That said, the yuan has strengthened somewhat since the
start of 2017 after an abrupt tightening of yuan liquidity in
Hong Kong, which traders believe was orchestrated by Chinese
authorities to squeeze investors shorting the Chinese currency.
    Wang reiterated a long-standing government line that there
is no basis for yuan depreciation in the medium and long term.
    China's central bank sold a net $46.1 billion worth of
foreign exchange in December. 

 (Reporting by Kevin Yao; writing by Elias Glenn; Editing by
Eric Meijer and Jacqueline Wong)