China's foreign exchange regulator said on Thursday that pressure from capital outflows eased somewhat in 2016 and there will be greater flexibility in the yuan's exchange rate in 2017. Authorities have taken a raft of steps in recent months to curb capital flight to support the yuan, while trying to bring in more foreign investment.
"With the steady progress of reforms of renminbi (yuan) exchange rate mechanism, the flexibility of renminbi exchange rate will be further enhanced," the State Administration of Foreign Exchange (SAFE) said in a statement. The pressure on China's cross-border capital outflows abated somewhat in 2016, it said. The statement did not give any specifics.
Increased yuan flexibility will help promote two-way cross-border capital flows, the regulator said. China's current account surplus is likely to be kept "within a reasonable range" this year, as the global economy stabilises despite risks from trade frictions, it said. Authorities will take measures to attract capital inflows this year, it added. In 2016, the yuan weakened 6.5 percent against the dollar. The Chinese currency has gained nearly 1 percent so far this year.
Final data from the SAFE showed a $196.4 billion current account surplus and a $26.3 billion surplus on the capital and financial account in 2016. The current account surplus in 2016 was equivalent to 1.8 percent of gross domestic product (GDP), the SAFE said. The ratio was down from as high as 10 percent in 2007.
In the last quarter of 2016, China had a final current account surplus of $11.8 billion and a surplus of $46.4 billion on its capital account and financial account, the data showed. Preliminary data from the SAFE had put China's full-year current account surplus at $210.4 billion, and its capital and financial account surplus at $47 billion.
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