2019 Article IV Consultation-Press Release; Staff Report; Staff Statement and Statement by the Executive Director for China


2019 Article IV Consultation-Press Release; Staff Report; Staff Statement and Statement by the Executive Director for China

Fund Relations

(As of June 30th, 2019)

Membership Status: Joined 12/27/45; Article VIII (December 1, 1996)

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans: None

Financial Arrangements:

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Projected Payments to Fund (SDR million; based on existing use of resources and present holdings of SDRs):

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Exchange Arrangements:

China’s de facto exchange rate regime has been classified as other managed arrangement, effective June 22, 2018. The previous classification was crawl-like against the basket of currencies in the CFETS index since June 1, 2017. The de jure exchange rate arrangement is managed floating with a view to keeping the RMB exchange rate stable at an adaptive and equilibrium level based on market supply and demand with reference to a basket of currencies to preserve the stability of the Chinese economy and financial markets. The floating band of the RMB’s trading prices is 2% against the U.S. dollar in the interbank foreign exchange market: on each business day, the trading prices of the RMB against the U.S. dollar in the market may fluctuate within a band of ±2% around the midrate released that day by China’s Foreign Exchange Trading System (CFETS). The People’s Bank of China (PBC) indicated that the RMB’s floating range would be changed in an orderly manner, based on the developments of the foreign exchange market and economic and financial situation. Within the trading band, banks may determine their RMB exchange rates to the U.S. dollar with their clients without any limit on the spread, based on market supply and demand (PBC No. 2014/188). On August 11, 2015, the PBC decided to further increase the flexibility of the RMB-to-USD exchange rate midrate quoting mechanism, thereby enhancing the market determination of RMB exchange rates, and giving market supply and demand an even greater role in exchange rate formation.

The CFETS publishes its exchange rate index (composed of 24 currencies since January 1, 2017, previously, 13 currencies), and other RMB indices based on the Bank for International Settlements (BIS) currency basket and the SDR currency basket.

China accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Articles of Agreement on December 1, 1996. China maintains an exchange system free of multiple currency practices and restrictions on payments and transfers for current international transactions. However, China has notified measures to the Fund, pursuant to procedures under the Executive Board Decision 144 (52/51), which apply to measures imposed solely for national or international security reasons.

While exchange controls continue to apply to most capital transactions, the use of renminbi in international transactions has expanded over time. Effective October 1, 2016, the RMB was determined to be a freely usable currency and was included in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, Japanese yen, and the British pound.

Relations with Other International Financial Institutions

World Bank: https://www.worldbank.org/en/country/china

Asian Development Bank: https://www.adb.org/countries/prc/main

Statistical Issues

(As of June 1, 2019)

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China: Table of Common Indicators Required for Surveillance

(As of June 2019)

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Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Only 12-month growth rates are reported (price indices are not available).

Data on financing (foreign, domestic bank and domestic nonbank financing) is not available.

The general government consists of the central (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Goods trade data are provided monthly. Services trade data are released with the current account statistics.

For real GDP, level data are available only on an annual basis (growth rates are available on a quarterly, cumulative basis).

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

Interest rates change only infrequently; these changes are publicly announced.

Capacity Development and Technical Assistance

China: Summary of Capacity Development and Technical Assistance, 2011–19 1/

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The new Institute for Capacity Development (ICD) was formed from the merger of the former IMF Institute (INS) and Office of Technical Assistance Management (OTM) on May 1, 2012.