The State Administration of Foreign Exchange (SAFE) has recently disseminated the initial data on the balance of payments for the second quarter and the first half of 2017, and its press spokesperson answered media questions on relevant issues.
Q: Could you brief us on the latest changes in China's balance of payments for the first half of 2017?
A: In the first half, the initial data in China's Balance of Payments show that twin surplus was registered under the current account and the financial account excluding reserve assets (including net errors and omissions for the second quarter, the same below), suggesting an increase in reserve assets.
First, a reasonable surplus was sustained under the current account, and foreign trade recorded growth on a year-on-year basis. In the first half, China posted USD 71.2 billion in the surplus under the current account, accounting for 1.3% of its GDP for the period. To be specific, trade in goods in the balance of payments registered a surplus of USD 215.4 billion, down by 7% year on year, but import and export of goods were up by 12% and 18% year on year respectively, indicating foreign trade remained steady with a good momentum for growth thanks to the continuous improvements in domestic and foreign demand. In comparison, trade in services recorded a deficit of USD 135.1 billion, up by 24% year on year, chiefly because of an increase of 26% under transport driven by import growth, and travel registered an increase of 19% in deficit.
Second, the financial account excluding reserve assets registered a surplus. In the first half, China witnessed a surplus of USD 15.6 billion under the financial account excluding reserve assets, versus a deficit of USD 225.9 billion for the same period last year on a comparable basis. In particular, direct investment recorded a net inflow of USD 14.2 billion, compared with a net outflow of USD 49.4 billion for the same period last year. Specifically, ODI registered a net outflow of USD 40.4 billion, and FDI, a net inflow of USD 54.6 billion, indicating investment has sustained a certain scale in both directions.
Third, reserve assets increased. In the first half, China's reserve assets rose by USD 29 billion due to the balance of payments transactions (excluding non-trading factors such as exchange rate and price), versus a decline of USD 157.8 billion for the same period last year. To be specific, foreign exchange reserves rose by USD 29.4 billion, and reserves position in the IMF dropped by USD 400 million.
Overall, China witnessed robust balance of payments in the first half, with cross-border capital flows getting stabilized with a good momentum for growth. In the future, the overall equilibrium of the balance of payments will have a stronger foundation.
