The State Administration of Foreign Exchange (SAFE) has recently released the Balance of Payments (BOP) for the third quarter of 2018 and the International Investment Position (IIP) as of the end of September 2018. The SAFE spokesperson and Chief Economist Wang Chunying answered media questions on relevant issues.

Q: What are the characteristics of China’s balance of payments in the third quarter of 2018?

A: In the third quarter of 2018, China’s current account and financial account excluding reserve assets both registered surplus and the balance of payments basically maintained equilibrium.

First, the surplus under the current account increased. In the third quarter of 2018, the surplus under the current account was USD 23.3 billion, up by 338% quarter-on-quarter. Specifically, the trade in goods in the BOP registered a surplus of USD 100.8 billion; the trade in services recorded a deficit of USD 80.9 billion, with travel, transport and intellectual property fees remaining the main deficit items of trade in services.

Second, the financial account excluding reserve assets maintained surplus, and the cross-border capital continued its net inflow trend since 2017. In the third quarter of 2018, there was a surplus of USD 14 billion in financial account excluding reserve assets. In particular, net inflows of USD 33.9 billion came from securities investment. Direct investment remained basically balanced, with a net outflow of USD 25.1 billion for ODI, and a net inflow of USD 25.2 billion from FDI.

Q: Could you tell us about China's international investment position (IIP) for the third quarter of 2018?

A: At the end of September 2018, China’s overall international investment position remained stable, and its reserve assets continued to be the largest in the world.

Firstly, the total size of external financial assets increased slightly. At the end of September 2018, China’s external assets reached USD 7,047.3 billion, up by 0.1% from the end of June. Specifically, ODI assets totaled USD 1,542 billion, up by 1.3%; external securities investment assets registered USD 528.8 billion, up by 2.0%; other external investment assets registered USD 1,793.6 billion, up by 0.8%; and reserve assets stood at USD 3,177.1 billion, still remaining the largest in the world.

Secondly, external liabilities increased. At the end of September 2018, China's external debt reached USD 5,354.5 billion, up by 1.1% from the end of June, mainly affected by exchange rate changes and revaluation. Specifically, FDI liabilities registered USD 2,960.3 billion, up by 0.3%; external securities investment liabilities stood at USD 1,133.1 billion, up by 0.4%; and other external investment liabilities registered USD 1,253 billion, up by 3.4%.