China to further support trade, fend off yuan overshooting amid tariff tensions

China will introduce new foreign exchange policies that facilitate cross-border trade and financing while guarding the yuan stability, a senior official said, as part of the country's ramped-up efforts to counter the shock stemming from US tariff measures.

"We will continue to roll out policy measures to support the development of cross-border trade and facilitate cross-border investment and financing, committed to deepening reform and opening-up in the foreign exchange sector," said Li Bin, deputy head and spokesman of the State Administration of Foreign Exchange.

"This will help better stabilize exports and foreign investments," Li said in a statement on Tuesday.

Li said that policymakers will also strengthen monitoring of the foreign exchange market, maintain exchange rate flexibility and enrich its macro-prudential policy toolkit for cross-border capital flows.

"We will resolutely correct pro-cyclical behavior in the market, guard against the risk of exchange rate overshooting and fend off the risk of abnormal cross-border capital flows, safeguarding the country's economic and financial security."

In the first quarter of 2025, China recorded a net capital inflow of $206.3 billion from trade in goods, a year-on-year increase of 120 percent, the administration said.

During the February-March period, foreign investors made a net increase of $26.9 billion in their holdings of onshore bonds, up 84 percent year-on-year. From April 1 to 18, they made a net purchase of $33.2 billion, maintaining a relatively high level.

Li said the renminbi's role as a diversified global asset is becoming more prominent, with the domestic securities market expected to attract more foreign capital.

"Going forward," he said, "China will introduce new incremental policies in a timely manner in response to changing circumstances, regard expanding domestic demand as a long-term strategic priority and promote the integrated development of technological and industrial innovation, supporting the stability of the renminbi exchange rate."

SAFE added that the accumulative amount of foreign exchange settlement and sales by banks was $529 billion and $586.6 billion from January to March, respectively.