The State Administration of Foreign Exchange (SAFE) has recently released the initial data on the Balance of Payments for the third quarter and the first three quarters of 2020. The SAFE deputy administrator and press spokesperson Wang Chunying answered media questions on relevant issues.
Q: Could you brief us on the characteristics of the balance of payments for the third quarter of 2020?
A: The initial data on the balance of payments show that, in the first three quarters of 2020, China’s current account registered a surplus of US$170.7 billion, 1.7% of the GDP of the same period, and the balance of payments maintained basic equilibrium. Specifically, the current account of the third quarter recorded a surplus of US$94.2 billion. Driven by the sustained and stable recovery of domestic economy and two-way opening-up of the financial market, the two-way cross-border capital flows have become more active.
First, the surplus under trade in goods increased. In the third quarter of 2020, the surplus in trade in goods under balance of payments reached US$155.4 billion, up by 27% year on year. Exports and imports increased by 9% and 5% year on year respectively, indicating that with the effective pandemic control in China and steady economic recovery, trade in goods has continued to improve.
Second, trade in services posted a declining deficit. In the third quarter of 2020, the deficit under trade in service was US$40.4 billion, down by 44% year on year. Specifically, tourism posted a deficit of US$28.6 billion, down by 50% year on year; the deficit in transport services was US$11.4 billion, down by 32%. On a quarter-on-quarter basis, travel expenses have risen from the second quarter due to the arrival of overseas back-to-school season, and transport revenue and expenditure have also picked up with the continued improvement of trade in goods.
Third, direct investments registered continuous net inflows, and the two-way capital flows on the securities market have become more active. In the third quarter of 2020, direct investments registered a surplus of US$23.9 billion, with outbound direct investments and foreign direct investments in China reaching US$33.2 billion and US$57.1 billion respectively, rising both in year-on-year and quarter-on-quarter terms. With respect to securities market, overseas investments in domestic securities in the third quarter exceeded US$70 billion, while China’s outbound securities investments surpassed US$30 billion.
It’s expected that China’s balance of payments will continue to maintain overall stability and basic equilibrium. China has entered a stage of high-quality development with bright long-term economic prospects and strong development resilience. China is accelerating its efforts to build a new development pattern, featured as domination by domestic cycle and mutual promotion between domestic and international cycle, which will provide strong support for the basic equilibrium of the balance of payments.