China FX flows: Goldman Sachs estimates China’s net FX inflows rose to US$55bn in August, led by a stronger current-account contribution.

Overview

Goldman Sachs reviews August SAFE-related data and concludes that China experienced substantially higher net FX inflows than in July. The improvement was driven by the current account and stronger FX conversion of the goods-trade surplus, while portfolio flows remained negative.

Core views

Goldman Sachs’ preferred measure indicates net FX inflows of US$55bn in August 2026, up from US$7bn in July. The estimate combines US$50bn of net inflows through onshore outright spot transactions and US$7bn from freshly entered and cancelled forward transactions, then incorporates US$2bn of outflows shown in SAFE’s cross-border RMB-flow dataset. The institution uses this combined approach to capture a broader view of FX flows than any individual series alone. The principal improvement came through the current account, where net inflows rose to US$62bn from US$41bn in July. Goods trade generated US$75bn of net inflows, compared with US$61bn in July, and the goods-trade FX conversion ratio climbed to 63% from 54% in July and 58% in the second quarter. Goldman Sachs also notes that the services-trade-deficit-related FX outflow narrowed to US$10bn from US$13bn, while the income and transfers account recorded a US$3bn outflow versus US$7bn previously. Together, these changes explain the stronger current-account contribution. Portfolio investment remained a counterweight. The channel recorded US$7bn of FX outflows in August, although this was narrower than US$9bn in July. North-Bound Bond Connect flows shifted to US$3bn of outflows from US$2bn of inflows in July. A broader portfolio-flow proxy—net foreign receipts, which covers transactions in both foreign currency and renminbi—showed US$27bn of outflows, wider than US$21bn in July. The report distinguishes this broader proxy from FX net settlement, which covers only flows denominated in foreign currency. Official FX reserves rose to US$3,438bn in August from US$3,419bn in July. Goldman Sachs estimates that valuation effects added US$8bn; its detailed discussion therefore puts the valuation-adjusted reserve increase at US$12bn, while the opening summary describes it as a modest US$11bn increase. Commercial banks’ net external assets increased by US$55bn in August, versus a US$41bn increase in July, reaching US$1,627bn outstanding. These balance-sheet movements are presented as consistent with the broader improvement in FX inflows.

Analysis framework

The report reconstructs net FX flows from SAFE datasets by combining spot and forward transactions with cross-border RMB flows. It then separates current-account and portfolio-investment channels, compares August with July and the second-quarter FX conversion ratio, and cross-checks the result against official reserves and commercial banks’ external-asset positions.

Methodology notes

• Other

  Preferred FX flow measure combining onshore spot, forward and cross-border RMB-flow data

  Goldman Sachs combines several SAFE-related flow series to estimate a broader monthly measure of net FX inflows.

• Other

  Valuation-adjusted FX reserves

  The report removes estimated FX valuation effects from the monthly change in official reserves to isolate the underlying reserve movement.

Key data

• Preferred net FX inflowsUS$55bn in August 2026Up from US$7bn inflows in July.
• Current-account FX inflowsUS$62bn in AugustUp from US$41bn in July.
• Goods-trade FX inflowsUS$75bn in AugustUp from US$61bn in July.
• Goods-trade FX conversion ratio63%Up from 54% in July and 58% in Q2.
• Portfolio-investment FX flowsUS$7bn outflow in AugustCompared with US$9bn of outflows in July.
• Net foreign receipts related to portfolio investmentUS$27bn outflow in AugustWider than US$21bn of outflows in July.
• Official FX reservesUS$3,438bnUp from US$3,419bn in July; estimated valuation effects added US$8bn.
• Commercial banks' net external assetsUS$1,627bn outstandingIncreased by US$55bn in August versus a US$41bn increase in July.

Impact & implications

The report attributes the rise in net FX inflows primarily to a stronger current-account channel and higher conversion of the goods-trade balance into FX. Continued portfolio-related outflows, particularly under the broader net-foreign-receipts measure, temper that improvement.