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Free AccessMNI: China Q1 Curr Acc Records First Deficit In Nearly 20 Yrs
--SAFE: FX Reserves Increase $26.6 Bln in Jan-Mar vs PBOC's $18.64 Bln Fall
--Capital Inflow Continues to Expand; Largest in 4 Yrs
BEIJING (MNI) - China's current account showed a deficit during the Jan-Mar
period, the first deficit since the second quarter of 2001. The deficit was due
to the rapid growth of imports largely surpassing an increase in exports, as
China emphasizes import expansion and boosting domestic demand to offset the
uncertainty of the outside trade environment.
The State Administration of Foreign Exchange (SAFE) announced Friday that
the current account, which includes net error and omission numbers, recorded a
$28.2 billion deficit at the end of the first quarter, compared with a $62.2
billion surplus in Q4, 2017.
The forex regulator attributed the deficit to fast increasing consumer
goods imports, which rose 21% year-on-year to $476.2 billion, while goods
exports grew by 11% to $529.6 billion.
For the whole quarter, the surplus in the goods trade account dropped 35%
year-on-year to $53.4 billion, and the deficit in service trade account rose to
$76.2 billion.
"Import growth exceeding an export increase helps balance our consumer
goods trade account," SAFE said, adding that the current account will remain in
a reasonable range for the whole year as seasonal effects fade.
The figures are preliminary, and SAFE is expected to release revised and
more extensive data at a later date.
--NARROWED SURPLUS
The world's second largest economy saw a narrower trade surplus in Q1 as
Wang Chunying, the spokeswoman of SAFE, said in the latest press conference.
"China is not pursuing a trade surplus... the international payment will
maintain balance this year."
This may be a music to the ear of the U.S as it points to a Sino-US trade
surplus of $375 billion, which is a trigger of the current trade spat.
According to the General Administration of Customs last month, the trade
surplus in Q1 narrowed to $48.39 billion, down 21.9% from a year earlier.
--CAPTIAL INFLOW
SAFE said the capital and financial accounts surplus widened to $28.2
billion, the largest since Q1 2017. The non-reserve financial account turned to
a $54.5 billion surplus, the biggest since Q1 2014.
"The surplus in the non-reserve financial account indicated the net
across-border capital inflow," SAFE said.
During January to March, direct investment recorded a net inflow of $50.2
billion, increasing by a factor of 3 year-on-year, while foreign direct
investment grew 1.1 times to a net inflow of $68.2 billion and outbound direct
investment dropped 12% year-on-year to a net outflow of $18.1 billion.
SAFE also said the country's foreign-exchange reserves rose by $26.6
billion in Q1. The People's Bank of China had previously reported a decline in
forex reserves of $18.64 billion during the same period, but the SAFE figure
excludes valuation and exchange rate changes and is a better reflection of real
money flows.
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.