BEIJING, July 18 (Reuters) - China expects cross-bordercapital flows to remain basically stable in the second half ofthe year, in spite of uncertainties in the global economy andtrade protectionism, its foreign exchange regulator said onThursday.
Positive factors outnumber the negative, as theinternational monetary policy environment is relatively looseand the U.S. trade deficit with China is increasing, WangChunying, a spokeswoman at the State Administration of ForeignExchange (SAFE), said at a news briefing.
China is expected to post a surplus in its current accountin the second quarter of this year and a small surplus for allof 2019, she said.
While the yuan currency has fluctuated this yearalong with twists and turns in the deepening U.S.-China tradedispute, China's foreign exchange reserves rose to the highestin more than a year in June, with outflows kept in check bytight capital controls and inflows buoyed by growing foreignpurchases of Chinese stocks and bonds.
The government will consider relaxing, or even scrapping theQualified Foreign Institutional Investor (QFII) quota, Wangadded.
China's securities regulator has issued draft rules thatwould combine the QFII and Renminbi Qualified ForeignInstitutional Investor (RQFII) schemes.
The cross-border Connect scheme linking Hong Kong andmainland bourses has become a more popular channel than QFII formany foreign investors seeking access to China's capitalmarkets, thanks to its absence of an aggregate quota, andrelative convenience in moving money in and out of China.Current QFII quotas have not been used up.
Wang also said China's foreign debt risks are controllableoverall. Last week, the country's state planner said it istightening restrictions on property companies seeking to raisefunds offshore, in its latest move to reduce potential financialrisks.
China's commercial banks sold a net $19.3 billion of foreignexchange in June, compared with a net purchase of $6.2 billionin May, the regulator said.
For January to June, net forex sales stood at $33.2 billion.
(Reporting by Ma Rong and Kevin Yao in BEIJING, Samuel Shen andJohn Ruwitch in SHANGHAI; Editing by Kim Coghill)