China’s International Balance of Payments to Remain Balanced in 2023
Data released by the State Administration of Foreign Exchange indicates that China’s international balance of payments is projected to remain balanced in 2023. The report revealed that the current account surplus was US$264.2 billion, with the surplus to the GDP ratio at 1.5%, falling within a reasonable and balanced range. Cross-border capital flows have stabilized and improved, with investment in China maintaining a net inflow pattern.
The report highlighted that the scale of goods trade surplus was the second-highest in history, reaching US$608 billion. This surplus is expected to support China’s current account in maintaining a substantial surplus. The report cited an increase in the resilience of foreign trade and a surge in import and export scale of goods trade throughout the year.
On the other hand, China’s service trade is operating in a more balanced manner, with the services trade deficit at US$229.4 billion, showing a trend towards pre-epidemic levels. The report emphasized the orderly recovery of service trade, particularly in items like travel and transportation, and the growth of surplus items in other commercial services such as consulting and advertising.
Furthermore, the report indicated a general net inflow trend in investment in China. Foreign equity direct investment saw a net inflow of US$62.1 billion throughout the year, with a significant increase in the scale of net inflow in the fourth quarter of 2023. Additionally, foreign capital continued to increase its net holdings of domestic bonds from September to December 2023.
Looking ahead to 2024, experts believe that the stability of China’s cross-border capital flows will continue to improve, with a reasonable size of surplus in the current account. It is expected that foreign capital inflows under the capital account will become more active due to China’s strong industrial capabilities, complete industrial chain, and the diversification of foreign trade products and markets.
Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, expressed confidence in China’s economic recovery and long-term improvement, amid favorable conditions and a more relaxed external financial environment. With these factors in place, China’s international balance of payments is well positioned to maintain a basic balance in the coming year.