The State Administration of Foreign Exchange (SAFE) recently released the Balance of Payments (BOP) for the second quarter of 2018 and the International Investment Position (IIP) as of the end of June, 2018. A press spokesperson of the SAFE answered media questions on relevant issues.
Q: Could you brief us on China’s balance of payments for the second quarter of 2018?
A: Based on the balance of payments, China's current account and financial account (excluding reserve assets) recorded a "twin surplus" for the second quarter of 2018. The balance of reserve assets rose and the balance of payments remained basic equilibrium.
First, in the current account surplus, the surplus of trade in goods increased while the deficit of trade in services was stable. In the second quarter of 2018, the current account recorded a surplus of USD 5.3 billion, among which trade in goods registered a surplus of USD 103.6 billion in the balance of payments, which doubled that of the previous quarter. A deficit of USD 73.7 billion was recorded under trade in services, flat quarter-on-quarter. Travel, transport and intellectual property fees remain major deficit items.
Second, the financial account (excluding reserve assets) continued to show surplus, and the cross-border capital continued its trend of net inflow. In the second quarter of 2018, the financial account (excluding reserve assets) registered a surplus of USD 30 billion, with cross-border capital continuing the trend of net inflows since the first quarter of 2017. The breakdowns are as follows:
Direct investment recorded a net inflow of USD 24.8 billion, which are relatively high in both directions. To be specific, ODI recorded a net outflow of USD 27.9 billion, and FDI, a net inflow of USD 52.7 billion. The net inflow of portfolio investments reached USD 61 billion, hitting a quarterly record high. Of this, the net outflow of external portfolio investment was USD 4.3 billion while the net inflow of portfolio investment in China hit USD 65.2 billion.
Third, reserve assets rose. In the second quarter of 2018, China's reserve assets rose by USD 23.9 billion as a result of the BOP transactions (excluding the impact of non-transaction factors such as exchange rate and price), among which, foreign exchange reserves increased by USD 22.9 billion.
Q: Could you brief us on China's international investment position for the second quarter of 2018?
A: According to the international investment position statement, China's overall international investment position remained robust at the end of June 2018. China recorded USD 1.7402 trillion in net external assets, up by 10.7% from the end of March, and the reserve asset size remained the first place in the world. The main characteristics are as follows:
First, external financial assets increased to a record high. China's external assets reached USD 7.0377 trillion at the end of June 2018, up by 0.2% from the end of March. To be specific, ODI assets rose by 1.7% to USD 1.5222 trillion. External portfolio investment totaled USD 518.3 billion, up by 0.7%. Other external investments amounted to USD 1.7801 trillion, up by 0.8%.
Second, external liabilities have decreased. At the end of June 2018, China's external liabilities reached USD 5.2975 trillion, down by 2.8% from the end of March, mainly affected by exchange rate changes and value revaluation. To be specific, China's direct investment liabilities were USD 2.9507 trillion, down by 3.8%. External portfolio investment liabilities stood at USD 1.1287 trillion, down by 2.1%; while other external investment liabilities amounted to USD 1.2113 trillion, down by 1.4%.
