Net capital inflows to China increase

Net capital inflows to China were about $20 billion in the first five months of the year, the country's foreign exchange regulator reported on Wednesday. This reversed a downward trend in the previous nine months, which showed capital inflows were falling.

In May, foreign exchange receipts into China's commercial banks reached $1.3 billion, according to the State Administration of Foreign Exchange.

Wang Yungui, director of policy and regulations department at SAFE, said this ended a nine-month net capital outflow.

"It indicates a more balanced foreign exchange market," Wang said during a news conference in Beijing. "The market has been improving since April and developing toward a more stable situation."

Data from the SAFE suggested net capital outflows in China with the central bank logging a $91.4 billion deficit in foreign exchange settlement in the first quarter.

But the SAFE said that China's capital outflows were "normal" and should not be regarded as capital flight.

Economists believe the increase in capital inflows will boost money supply in the domestic financial market and delay the government's decision for further monetary easing.