The State Administration of Foreign Exchange (SAFE) recently released the preliminary data of the balance of payments for the second quarter and the first half of 2021. Wang Chunying, SAFE Deputy Administrator and Press Spokesperson, answered media questions on relevant issues.
Q: What are the characteristics of China’s balance of payments in the first half of 2021?
A: The preliminary data shows that, in the first half of 2021, China maintained a basic equilibrium in its balance of payments. The current account reached surplus of US$122.2 billion, accounting for 1.5% of its gross domestic product during the period, which remained within the reasonable equilibrium range. Direct investment witnessed a net inflow.
First, the trade surplus in goods increased year on year. In the first half of 2021, trade in goods on BOP basis posted a surplus of US$230.6 billion, up 35% year on year. Specifically, the export of goods reached US$1.4536 trillion, an increase of 36% year on year, reflecting the combined influence of improved domestic production capacity and pick-up in external demand. The import of goods registered US$1.2229 trillion, a year-on-year increase of 37%, which was mainly attributed to the recovery of the domestic demand and high international commodity prices.
Second, the trade deficit in services narrowed year on year. In the first half of 2021, the trade deficit in services recorded US$43.8 billion, a year-on-year decrease of 43%. Travel, intellectual property royalties, and transportation were the main deficit items. Specifically, the deficit in travel declined 28% from a year ago to US$44.4 billion as cross-border tourism and study abroad were affected by the spread of COVID-19 overseas. The deficit in intellectual property royalties was US$15.6 billion, up 21% year on year, with both revenue and expenditure on intellectual property royalties increased, reflecting the mutual benefit and win-win results of China’s efforts to expand international cooperation in the field of intellectual property. The deficit in transportation registered US$7.5 billion, down 61% from the same period last year, as revenue from transportation services grew faster than expenditure.
Third, China saw a relatively high surplus in foreign direct investment. In the first half of 2021, the net inflow of foreign direct investments was US$123.7 billion. The net inflow of direct investment to China reached US$179.6 billion, among which the net inflow was US$97.6 billion and US$82 billion, respectively, in the first quarter and the second quarter, both maintaining at a relatively high level. The net outflow of China’s foreign direct investment was US$55.9 billion, indicating that the outward foreign direct investment of enterprises was in a stable and orderly manner.
China is accelerating the construction of a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. The basis of internal and external economic development is much stronger, which lays a solid foundation for the stability and basic balance of China’s current account and is conducive to maintaining equilibrium in the balance of payments.