SCIO press conference on foreign-exchange receipts, payment data of Q1 2023
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E-mail China.org.cn, June 8, 2023
21st Century Business Herald:
Just now, you mentioned that SAFE has been promoting risk neutrality awareness in Chinese enterprises. What other measures will SAFE take this year to guide Chinese enterprises, particularly micro, small and medium-sized enterprises (MSMEs), to avoid exchange rate risks? Thanks.
Wang Chunying:
Before answering this question, I once again ask you to continue to help us carry out publicity. In recent years, we have intensified our efforts to raise the awareness of risk neutrality of Chinese enterprises and have achieved remarkable results. We will continue to proceed with the work this year. SAFE always encourages enterprises to adopt appropriate strategies to manage exchange rate risk exposure according to their actual situation. There are many ways for enterprises to control exchange rate risks. In addition to hedging through derivatives, the use of yuan settlement is also a good way. And trade financing, whether late payment or early payment, late collection or early collection, is also a great method to hedge risks. According to the survey of SAFE, in the first quarter of this year, a considerable number of enterprises have adopted methods, including yuan settlement, hedging operations, adjusting settlement methods, and changing the speed of reimbursement of goods to manage the exchange rate risk. These are all excellent methods.
Efforts will be made to promote enterprises to establish a sense of risk neutrality, especially among MSMEs, and to make them do better in exchange rate hedging. To this end, we will work on the following aspects and strive to enhance enterprises' ability to improve the quality and efficiency in risk management of foreign exchange.
First, we will continue to offer guidance on raising their awareness of exchange rate risk neutrality. For example, we will expand the coverage of publicity in this aspect. Especially, we will offer targeted guidance to those enterprises with potential demands that have not carried out or rarely used hedging operations. Besides, we will provide more detailed and targeted exchange rate risk management guidelines. We plan to work with the State-owned Assets Supervision and Administration Commission (SASAC) to compile cases of hedging guidelines for state-owned enterprises and prepare a set of cases of enterprise exchange rate risk management. We count on media friends to help us publicize.
Second, we will support financial institutions to enhance service capacity building. We will improve the special assessment of exchange rate risk management of financial institutions on serving enterprises and guide and encourage banks to optimize the credit margin system, especially for MSMEs. At the same time, we will enhance the business capacity of bank branches to provide better services to more market participants, particularly MSMEs. Doing so will form a long-term mechanism for banks to serve enterprises in the area of exchange rate risk management. We will continue to make steady and concrete efforts in this regard.
Third, we will provide more support for MSMEs in exchange rate hedging. We continue to pool efforts to optimize the cost-sharing mechanism among the government, banks, and enterprises so as to reduce the hedging costs of MSMEs. At the same time, we need to ensure that the existing policies continue to be effective. Government departments have taken numerous actions over the last two years to lower the hedging expenses for MSMEs. At the same time, we encourage the development of new forms of trade and support the integrated foreign trade service platform in providing foreign exchange hedging services for MSMEs.
Finally, I would like to stress again that enterprises must establish awareness of exchange rate risk neutrality. We encourage enterprises to base themselves on the main business, adhere to financial stability and sustainable development, and keep exchange rate risk exposure within a controllable range. Besides, they should prudently arrange the currency structure and maturity of assets and liabilities and choose appropriate exchange rate hedging strategies. Thanks.
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