1st LD Writethru: China's cross-border capital outflows pressure eases

China's cross-border capital outflow pressure has eased significantly in recent months, an official with the foreign exchange regulator said on Tuesday.

China's foreign exchange reserves fell 28.6 billion U.S. dollars in February, down from the decreases of 107.9 billion dollars in December and 99.5 billion dollars in January, Wang Yungui, from the State Administration of Foreign Exchange (SAFE), told a press conference.

Cross-border capital outflow was down 45 percent in February month on month. Depreciation pressure on the yuan has largely been removed and its value has also gradually stabilized.

This shows that cross-border capital outflow from China has moderated, Wang said.

China currently has enough tools to cope with capital outflows, and might consider new measures such as a Tobin tax or a financial transaction tax, to prevent international currency speculation, he said.

However, all the new tools must be studied to see if they conform to the Chinese market's actual conditions, he added.

Wang also reiterated that there was no basis for the yuan's continuous depreciation, as the country's economic fundamentals remain sound with a large trade surplus and increasing foreign direct investment.

He said the country should strengthen exchange rate expectation management, and step up supervision over capital inflows and outflows from China.

"Cross-border capital movement is expected to stabilize some time in the future," Wang Chunying, another SAFE official, said at the conference.

China aims to expand its economy by 6.5 percent to 7 percent in 2016, which is a high target. Thus, China's fundamental of attracting foreign capital inflows will not be changed, he added. Endi