China: SAFE data suggest continued FX inflows in September

Our preferred FX flow measure suggests continued net FX inflows in September, though smaller than in August. The current account channel recorded net inflows, with goods trade inflows rising and the services trade deficit-related outflows widening slightly, while the income and transfers account was roughly unchanged; the FX conversion ratio rose further. The portfolio investment channel shifted to modest FX outflows, with Northbound Bond Connect still seeing inflows, while net foreign receipts on a broader basis pointed to larger outflows. Official FX reserves declined, but only modestly after adjusting for FX valuation effects, and commercial banks' net external assets increased, lifting the banking system's net external position further.