The State Administration of Foreign Exchange (SAFE) recently released the Balance of Payments (BOP) for the third quarter and the first three quarters of 2023 as well as the International Investment Position (IIP) at the end of September 2023. SAFE Deputy Administrator and Press Spokesperson Wang Chunying answered media questions on relevant issues.
Q: Could you brief us on China’s BOP for the first three quarters of 2023?
A: In the first three quarters of 2023, China’s BOP maintained a general equilibrium.
First, the current account surplus remained within a reasonable and balanced range. In the first three quarters of 2023, the current account surplus registered USD 209 billion, with its ratio to Gross Domestic Product (GDP) reaching 1.6%, thus maintaining within a reasonable and balanced range. Specifically, trade in goods in terms of BOP recorded a surplus of USD 454.4 billion, the second-highest in the same period in history during the first three quarters of the year. The export of goods reached USD 2336.4 billion, while imports of goods recorded USD 1882 billion. Both remained at a high level during the same period in history. Trade in services continued to recover at a steady pace, and expenditure on cross-border tourism and related items increased in an orderly manner. In the first three quarters of 2023, the trade deficit in services totaled USD 168.4 billion. Among the main items, the travel deficit rose by 69% year-on-year to USD 130.3 billion. The deficit in primary income narrowed by 46% year-on-year to USD 87.7 billion, mainly due to the 42% year-on-year increase in income from various outbound investments.
Second, cross-border investments were conducted in an orderly manner. In the first three quarters of 2023, the net inflow of foreign direct investment (FDI) in China under the capital account reached USD 15.5 billion. In this regard, there was a net inflow of USD 38.7 billion of direct investments in China in the form of equity investment, involving capital contributions and reinvestment of profits. Recently, China witnessed a positive trend in the net inflow of foreign direct investment. This improvement can be attributed to a decrease in seasonal factors influencing the distribution of profits from direct investments and a slowdown in the net outflow of funds related to the corporate debts of affiliated enterprises. In the meantime, with its persistent advantages in the hyperscale market and complete industrial system, and the systematic steps taken to facilitate high-level institutional opening up, China is poised to continue attracting a steady inflow of foreign investments in the foreseeable future. Besides, in the first three quarters of 2023, the scale of cross-border capital outflows under securities investment narrowed by 62% year on year. Notably, non-residents’ investment in Chinese bonds has turned into a net inflow since September. With the gradual improvement of the internal and external economic and financial environment, the stability of China’s cross-border capital flow will be further strengthened.
In summary, the favorable conditions supporting China’s economic development outweigh the unfavorable factors. The overall trend of China's economic recovery and long-term improvement remains unchanged, which is conducive to supporting China in maintaining a basic equilibrium in its BOP.
Q: What would you say about China’s IIP at the end of September 2023?
A: By the end of September 2023, China’s IIP remained robust, and its reserve assets continued to rank first in the world in terms of size.
First, China’s net external assets increased in size. As of the end of September 2023, China’s external assets amounted to USD 9304.6 billion and its external liabilities amounted to USD 6448.1 billion. Its net external assets (assets minus liabilities) reached USD 2856.5 billion, up by 2.9% from the end of June, maintaining stable growth.
Second, the overall structure of China’s external assets and external liabilities continued to be optimized. In the catalogue of China’s external assets, China’s reserve assets reached USD 3.3 trillion, continuing to rank first in the world in terms of size. The proportion of non-reserve assets increased slightly from the end of June 2023. With respect to external liabilities, more than half are direct investments in China, totaling USD 3.3 trillion. This reflects an increase compared to the end of June 2023, indicating that China remains attractive to long-term foreign capitals.
