The State Administration of Foreign Exchange (SAFE) has recently released the preliminary data in the Balance of Payments for the first quarter of 2017, and its press spokesperson answered media questions on relevant issues.
Q: Could you brief us on the balance of payments for the first quarter of 2017?
A: The preliminary data in the Balance of Payments for the first quarter of 2017 present the following features:
First, the surplus under the current account continues to remain in a reasonable range. In the first quarter of 2017, the current account registered a surplus of USD 19 billion, 0.7% of GDP. In particular, trade in goods in the Balance of Payments recorded a surplus of USD 81.7 billion, which fell on a year-on-year basis. But the imports and exports of goods have represented year-on-year increases for the first time since the second quarter of 2015, which were 12% and 23% respectively, indicating the strengthening of domestic and external demand has contributed to the stabilization of foreign trade. Trade in service recorded a deficit of USD 60.1 billion, up by 11% year on year, because the deficit under transportation driven by import growth rose by 34%, and the growth of travel deficit dropped to 5% versus the previous quarter. The primary income registered a surplus of USD 100 million alongside the increase in returns on investment, compared with a deficit of USD 4.1 billion for the same period of the previous year.
Second, the deficit in the financial account excluding reserve assets (including net errors and omissions, same below) plummeted. In the first quarter, the financial account excluding reserve assets recorded a deficit of USD 21.5 billion, down by 87% year on year and quarter on quarter, of which, direct investment recorded net inflows of USD 11.4 billion. To be specific, ODI registered net outflows of USD 20.9 billion, down by 64% year on year and 43% quarter on quarter, suggesting market participants have become more reasonable in making outbound investments. FDI recorded net inflows of USD 32.4 billion, which remains at high level.
Third, the BOP transactions have led to a slight decrease in reserve assets, with the margin shrinking remarkably. In the first quarter, due to the BOP transactions (excluding the impact from non-trading factors such as exchange rates and prices), China's reserve assets fell by USD 2.6 billion, which was 98% less on a year-on-year and quarter-on-quarter basis. To be specific, foreign exchange reserves dropped by USD 2.5 billion and its reserve position in the IMF decreased by USD 100 million.
Overall, China's BOP sustained a basic equilibrium in the first quarter, suggesting that alongside the advancement of the structural reform, economic growth has been increasingly stable, and the fundamentals for China's BOP are good.
