The State Administration of Foreign Exchange (SAFE) has recently disseminated the preliminary data in the Balance of Payments for the first quarter of 2018, and its press spokesperson answered media questions on relevant issues.
Q: Could you brief us on the new characteristics of the balance of payments for the first quarter of 2018?
A: The preliminary data in the Balance of Payments for the first quarter show that the current account was in deficit, the financial account (excluding reserve assets) (including net errors and omissions for the quarter, the same below) was in surplus, and reserve assets rose, with the main new characteristics as follows:
First, the deficit in the current account was caused by seasonal factors and rapid increase in import of goods. In the first quarter, the current account recorded a deficit of USD 28.2 billion, with a surplus of USD 53.4 billion under trade in goods in the Balance of Payments, down by 35% year on year. To be specific, export of goods was USD 529.6 billion, up by 11% year on year, and import of goods was USD 476.2 billion, up by 21% year on year. The import growth outpaced the export growth, further balancing trade in goods. Moreover, as Chinese people are on holidays at the beginning of the year, the balance of trade in goods for the first quarter is usually at the low level of the year. It is expected that the receipt and payment under the current account will remain in a reasonable range throughout the year.
Second, the financial account excluding reserve assets was in surplus, featuring net cross-border capital inflows. In the first quarter of 2018, the financial account excluding reserve assets registered a surplus of USD 54.5 billion, and cross-border capital recorded net inflows, which has been so since the second quarter of 2017.
Third, FDI rose rapidly, suggesting overseas investors are optimistic about China's economic prospects. In the first quarter, China posted USD 50.2 billion in net inflows of direct investment, which was three times higher than that in the same period last year. For composition, ODI recorded net outflows of USD 18.1 billion, down by 12% year on year; and FDI registered net inflows of USD 68.2 billion, 1.1 times higher than that in the same period last year.
Fourth, reserve assets continued to increase, resulting in an adaptive equilibrium in the balance of payments. In the first quarter, China's reserve assets rose by USD 26.2 billion due to BOP transactions (excluding non-transaction factors like foreign exchange rate and price). Specifically, foreign exchange reserves went up by USD 26.6 billion, compared with a decrease of USD 2.5 billion in the same period last year.
Overall, China's balance of payments maintained a basic equilibrium in the first quarter, with cross-border capital continuing with net inflows, and reserve assets rising stably, indicating a solid foundation for the overall equilibrium in the balance of payments in the future.
