China’s balance of payments remains stable

Owen Brown

China’s international balance of payments remained stable last year, with the current account surplus totalling $20.52 billion, state media reported.

Statistics from the State Administration of Foreign Exchange, published on the People’s Daily Web site, showed that merchandise exports grew 28 per cent in 2000 to $ 249.1 billion. Merchandise imports rose 35 per cent to $214.66 billion for a total merchandise trade surplus of $34.47 billion, the report said.

The inflow of hard currency from trade and investment-related spending helped China to maintain the stability of the yuan despite weakness in other Asian currencies, including the yen.

In fact, the strong trade and investment performance pushed the yuan higher against the dollar to an exchange rate of 8.2781 at the end of 2000 from 8.2795 the previous year.

The improvement in the current account from a $15,67 billion surplus in 1999 helped to offset a decline in China’s tightly controlled capital account. After achieving a modest surplus in 1999, the capital account dropped to a $400 million deficit in 2000.

China’s services sector remained in deficit last year despite an increase in receipts.

Service item receipts rose 28 per cent to $30.43 billion, but the deficit in service item payments was $5.6 billion.

The deficit from unrequited transfers totalled $6.31 billion, the report said. Repatriated income from overseas earnings grew 19 per cent to $12.25 billion, while company transfers offshore fell 4.7 per cent to $27.22 billion for an income account deficit of $14.67 billion.

As previously reported, foreign reserves rose $10.9 billion to $165.57 billion at the end of 2000.

China’s combined capital and financial account, which is strictly controlled by the government to ensure stable capital inflows, narrowed by $5.72 billion last year to $1.92 billion.