Big Moves: Foreign Investors Bought More Chinese Stocks in May 2025, SAFE Data Shows

If you’re tracking global investment trends, particularly foreign investment in China’s domestic stocks, May 2025 brought some noteworthy action.

The State Administration of Foreign Exchange (SAFE) (Guojia Waihui Guanliju 国家外汇管理局) just dropped its latest figures for May 2025. This data covers bank settlement, foreign exchange sales, and those all-important cross-border receipts and payments on behalf of customers.

Li Bin (李斌), SAFE’s Deputy Administrator and Spokesperson, recently provided insights into what these numbers mean for China’s foreign exchange market.

So, let’s dive into the details and see what this could signal for investors, founders, and tech enthusiasts watching the Chinese market.

Decoding China’s Forex Scene: Q&A Insights from SAFE (May 2025)

Here’s the lowdown, based on the official Q&A, addressing the key question on everyone’s mind:

Q: What was the actual situation in China’s foreign exchange market in May 2025?

A: According to Li Bin (李斌), the overall picture for May was one of general balance and smooth operation.

Essentially, onshore foreign exchange supply and demand were pretty well matched, and the market mechanisms were ticking along nicely.

Here’s a more detailed breakdown of the key highlights:

Key Trend 1: Cross-Border Capital Kept Flowing In

This is a big one. The data shows a continued healthy inflow of capital from abroad.

• Impressive Inflow Figures: In May, the non-bank sector (which includes enterprises and individuals) saw a net cross-border capital inflow of a whopping ¥330 billion RMB.
  To put that in perspective, that’s approximately $45.52 billion USD (based on the exchange rate on June 17, 2025).
  Such a substantial figure often points to underlying confidence in the market or specific investment opportunities.
• Trade in Goods Remained Buoyant: The net inflow from trade in goods continued to be at a “relatively high level.”
  This suggests China’s export sector maintained its strength, a crucial pillar for its economy.
• Attention Investors: Domestic Stocks Got a Boost! This is a critical point: Foreign investors further increased their holdings of domestic stocks in May compared to April.
  This direct uptick in stock holdings by international players is a strong signal, potentially indicating a growing appetite for Chinese equities or a more bullish outlook on specific sectors.
• Stable Outflows in Other Areas: Things like net outflows from trade in services, dividend payments by foreign-invested enterprises, and outbound direct investment (Chinese companies investing abroad) all remained “generally stable.”
  Stability here means no sudden capital flight or unexpected drains, contributing to overall market predictability.

Key Trend 2: Market Expectations Were Stable and Orderly

It wasn’t just about the money coming in; it was also about how the market participants were behaving.

• Shift to Surplus in FX Settlement: Bank foreign exchange settlement and sales actually turned to a surplus in May.
  This is a noteworthy development. A surplus can indicate that more foreign currency is being converted into RMB than vice-versa, potentially strengthening the local currency or reflecting a preference to hold RMB assets.
• Steady Willingness to Settle FX: The willingness of enterprises and individuals to settle their foreign exchange (convert it to RMB) was described as stable.
  No surprises here, which is good for market predictability.
• Reduced Demand for Buying Foreign Exchange: Interestingly, the demand for purchasing foreign exchange decreased.
  Less demand to buy foreign currency can ease pressure on the RMB and might suggest reduced concerns about RMB depreciation or fewer immediate needs for outbound payments.
• Rational and Orderly Transactions: Overall, market transactions were characterized as “rational and orderly.”
  This indicates a mature market environment, free from panic or speculative frenzy, which is what regulators and long-term investors like to see.

• Bank foreign exchange settlement and sales turned to a surplus.
• Willingness of enterprises/individuals to settle FX is stable.
• Demand for purchasing foreign exchange decreased.
• Transactions were rational and orderly.

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What’s Underpinning This Forex Market Stability?

So, what’s the driving force behind this positive picture?

Li Bin (李斌) highlighted that China’s economy is maintaining an “overall stable and steadily progressing development trend.”

This fundamental economic health is seen as the robust foundation providing strong and continuous support for the stable operation of the foreign exchange market.

For those of us in the investment, tech, and startup world, this blend of consistent economic progress and resultant forex stability can translate to a more predictable environment for engaging with the Chinese market. This is especially true for those eyeing opportunities related to foreign investment in China’s domestic stocks and other asset classes.

References

• Homepage – State Administration of Foreign Exchange
• China’s May FX Settlement Surplus, Moderate Capital Flows – Reuters
• China’s May Foreign Exchange Data Shows Increased Stock Holdings by Foreigners – Bloomberg