China retained balance its current account surplus in 2018

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China retained a current account surplus in 2018 and it will remain basically balanced in future, the foreign exchange regulator said on January 30.

China‘s current account is slowly swinging from a decades’ long surplus towards a deficit. Analysts say that will mark a major structural shift in global capital flows in and out of the country which could make the yuan exchange rate more volatile.

“Based on preliminary statistics, China’s current showed a certain surplus in 2018, which continued to be within a reasonable range,” Wang Chunying, spokeswoman at for State Administration of Foreign Exchange (SAFE), told Chinaforex.com.cn, the website of the regulator’s publication.

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China’s final current account deficit for the first nine months of 2018 was $5.5 billion while the final capital and financial account surplus was $95.4 billion, earlier official data showed.

Analysts have attributed the current account deficit to China’s narrowing trade surplus and its widening services trade deficit. But December’s trade surplus was the largest in three years.

The 2017 current account surplus was equivalent of 1.3 percent of China’s gross domestic product (GDP), down from 1.8 percent in 2016. The ratio has been falling steadily from as high as 10 percent in 2007.

The SAFE is expected to release 2018 preliminary current and capital account data next month.

There is room for China to attract more capital inflows, mainly for mid-to-long term investments, Wang said.

China will develop more foreign exchange trading tools and improve liquidity of its currency market, Wang added.

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Krishna Mali
Krishna Mali
Founder & Editor of TechGraph

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