The State Administration of Foreign Exchange (SAFE) has recently released the Balance of Payments (BOP) and International Investment Position (IIP) for the first quarter of 2018. Its press spokesperson answered media questions on relevant issues.

Q: Could you brief us on China's balance of payments for the first quarter of 2018?

A: China's BOP found an adaptive equilibrium in the first quarter of 2018. The financial account excluding reserve assets was in surplus, the receipts and payments under the current account were further balanced and reserve assets rose.

The financial account excluding reserve assets registered a higher surplus. In the first quarter, the financial account excluding reserve assets recorded a surplus of USD 98.9 billion, growing 1.7-fold year on year. On the one hand, outbound investments stayed stable. In the quarter, the external financial assets arising from BOP transactions jumped by USD 72 billion net, up by 32% year on year. Specifically, ODI went up by USD 17.9 billion net, external securities investment rose by USD 33.5 billion net, and other investments such as external deposits and loans increased by USD 20.8 billion net. On the other hand, overseas investors continued to increase investments in China. In the quarter, external liabilities grew by USD 170.9 billion net. To be specific, FDI grew by USD 73 billion net, securities investment in China rose by USD 43.8 billion net; and other investments in China such as non-resident deposits attracted and overseas loans obtained jumped by USD 54.4 billion net.

The receipts and payments under the current account were further balanced. In the first quarter, the current account registered a deficit of USD 34.1 billion. The surplus under trade in goods shrank as imports outpaced exports. Driven by the higher deficit under transportation and travel, trade in services recorded an increased deficit. The balance of the current account contributed -1.1% to China's GDP, which was within the reasonable range though.

Reserve assets rose. In the first quarter, China witnessed an increase of USD 26.2 billion in reserve assets as a result of BOP transactions (excluding non-trading factors such as foreign exchange rates and prices), versus a decrease of USD 2.6 billion a year earlier. In particular, foreign exchange reserves went up by USD 26.6 billion and its reserve position in the IMF decreased by USD 400 million.

Q: What would you say about China's international investment position for March 2018?

A: As at the end of March, China's international investment position remained robust, with external assets and liabilities rising from a year earlier. China recorded USD 1.5725 trillion in net external assets as at the end of March. To be specific, China's external assets amounted to USD 7.0252 trillion and its external liabilities hit USD 5.4527 trillion, up by 1.4% and 6.7% quarter on quarter respectively (same below).

External assets went up. Specifically, direct investment assets rose by USD 24.5 billion or 1.7%; securities investments picked up by USD 17.3 billion or 3.5%; financial derivative assets perked up by USD 1.8 billion or 30.1%; other investment assets climbed by USD 51.5 billion or 3.0%; and reserve assets increased by USD 4.4 billion or 0.1%.

External liabilities rose. Direct investment liabilities rose by USD 165.5 billion or 5.7%, owing to higher direct investments of foreign investors in the Chinese market, as well as foreign exchange rate conversion along with RMB appreciation; securities investment liabilities increased by USD 109.6 billion or 10.5%, as a result that foreign investors increased their holding of securities issued by China domestically and globally, as well as of value reassessment; financial derivative liabilities grew by USD 700 million or 20.4%; and other investment liabilities went up by USD 65.3 billion or 5.6%.

Looking at the items, we found from external assets that direct investment assets reached USD 1.4974 trillion, 21% of total assets; securities investment assets amounted to USD 514.5 billion, 7% of total assets; financial derivative assets were USD 7.8 billion, 0.1% of total assets; other investment assets reached USD 1.7652 trillion, 25% of total assets; and reserve assets hit USD 3.2403 trillion, 46% of total assets. Of external liabilities, direct investment liabilities hit USD 3.0670 trillion, 56% of total liabilities, making it No. 1 in external liabilities; securities investment liabilities reached USD 1.1535 trillion, 21% of total liabilities; financial derivative liabilities were USD 4.1 billion, 0.1% of total liabilities; and other investment liabilities amounted to USD 1.2281 trillion, 23% of total liabilities.