CHINA expects cross-border capital flows to remain basically stable in the second half of the year, in spite of uncertainties in the global economy and trade protectionism, its foreign exchange regulator said Thursday.

Positive factors outnumber the negative, as the international monetary policy environment is relatively loose and the U.S. trade deficit with China is increasing, Wang Chunying, a spokeswoman at the State Administration of Foreign Exchange (SAFE), said at a news briefing.

China is expected to post a surplus in its current account in the second quarter of this year and a small surplus for all of 2019, she said.

China will consider relaxing, or even scrapping the Qualified Foreign Institutional Investor (QFII) quota, Wang said.

China’s securities regulator has issued draft rules that would combine the QFII and Renminbi Qualified Foreign Institutional Investor (RQFII) programs.

The cross-border connect program linking Hong Kong and mainland bourses has become a more popular channel than QFII for many foreign investors seeking access to the Chinese mainland capital markets, thanks to its absence of an aggregate quota, and relative convenience in moving money in and out of the mainland. Current QFII quotas have not been used up.

Wang also said China’s foreign debt risks are controllable overall. Last week, the country’s top economic planner said it is tightening restrictions on property companies seeking to raise funds offshore, in its latest move to reduce potential financial risks.

China’s commercial banks sold a net US$19.3 billion in foreign exchange in June, compared with a net purchase of US$6.2 billion in May, the regulator said.

For January to June, net forex sales stood at US$33.2 billion.

(SD-Agencies)