China Data Shows $73 Billion Gap on Cross-Border Yuan Use

How much yuan flowed into or out of China last year? Depending on which official data you look at, the answer differs by $73 billion.

Data from the People’s Bank of China and its forex regulator, the State Administration of Foreign Exchange, tell a very different story about the yuan-denominated capital flows in and out of China. While the PBOC said there was a net inflow of about 360 billion yuan ($53 billion) last year, data from SAFE showed about 140 billion yuan left the country.

China Data Shows $73 Billion Gap on Cross-Border Yuan Use

“The difference mainly comes from the items called securities investment and other investment,”, the central bank said in a written response to questions from Bloomberg News. The PBOC and SAFE categorize yuan settlement data differently as they have separate goals of data analysis or regulatory supervision, the statement explained.

The “net flows” data show money received and paid out in yuan for things like trade, foreign direct investment and financial investment via both the current and capital accounts. The gap started growing after the yuan’s devaluation in 2015 when large amounts of money left China, but had gone largely unnoticed.

The SAFE data reflects banks’ receipts and payments made to clients but excludes their cross-border financing and investments, while the PBOC data covers both. For capital flows via stock and bond investment, the two authorities have different classification methods, the PBOC said.

“Both data can be used for market analysis as long as the gauges are clear,” said Ji Tianhe, a strategist at BNP Paribas SA in Beijing. He said he’d prefer using the SAFE data in the future as it’s more precise and timely.

Cross-border yuan flows is an important indicator of the currency’s global usage. In 2019, the amount of receipts and payments in yuan rose 24% to a record 19.7 trillion yuan, according to the PBOC.

©2020 Bloomberg L.P.

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