The State Administration of Foreign Exchange (SAFE) has recently released the preliminary data on the balance of payments for the second quarter and the first half of 2019. SAFE spokesperson and Chief Economist Wang Chunying answered media questions on relevant issues.

Q: Could you brief us on the characteristics of the balance of payments for the first half of 2019?

A: In the first half of 2019, a surplus of USD 106 billion was recorded under the current account, and its ratio to GDP was 1.6%. As initially estimated, net inflows were registered under the financial account excluding reserve assets, and direct investment and portfolio investment were in surplus. Specifically,

First, under the current account, trade in goods remained in surplus, trade in service recorded a shrinking deficit, and primary and secondary income were in surplus. In the BOP, trade in goods registered a surplus of USD 222.8 billion in the first half; trade in service registered a deficit of USD 129.3 billion, down by 12% year on year. Deficits were recorded under travel and transportation but went down by 8% and 14% year on year respectively; primary income registered a surplus of USD 7.1 billion, versus a deficit of USD 30.3 billion the same period last year; secondary income represented a surplus of USD 5.4 billion, compared with a deficit of USD 6.5 billion the same period last year.

Second, under the financial account excluding reserve assets, direct investment and portfolio investment remained in surplus. In the first half, direct investment registered a surplus of USD 33.6 billion. In particular, ODI, at USD 46.7 billion, stayed stable; FDI, at USD 80.3 billion, remained high. Under portfolio investment, foreign investors bought additional securities of USD 50-odd billion while China bought foreign securities of extra USD 30-plus billion, and two-way equity and bond investment increased, suggesting that the two-way opening of capital market in China has fueled capital transactions and cross-border capital flows to better satisfy the demands for cross-border asset allocation among domestic and foreign investors.

Currently China sees stable economic expectations, deeper opening up, and deeper trade and investment liberalization and facilitation. It is expected that during the whole year, the current account will remain within the reasonable range and likely to continue with a slight surplus; and the financial account excluding reserve assets will remain stable. All this shows that the balance of payments will remain in an equilibrium.