The State Administration of Foreign Exchange (SAFE) has recently published the preliminary data on the Balance of Payments for the fourth quarter of 2020 and the whole year. The SAFE deputy administrator and press spokesperson Wang Chunying answered media questions on relevant issues.

Q: Could you brief us on the features of China's balance of payments for 2020?

A: The preliminary data on the Balance of Payments show that, in 2020, China’s current account registered a surplus of US$298.9 billion, 2% of the GDP of the same period, which remained in a reasonable range. Cross-border capital flows were stable in both directions and the balance of payments maintained basic equilibrium.

First, trade in goods maintained a high surplus. Trade in goods in terms of BOP registered a surplus of US$533.8 billion in 2020. Specifically, exports increased 4% year on year while imports remained relatively unchanged from 2019, both of which remarkably outperformed expectations. On a quarterly basis, the surplus of trade in goods presented a “rising and then falling” trend. In the first quarter, due to the outbreak of the COVID-19 pandemic, the size of surplus fell obviously. In the second quarter to the fourth quarter,  as a result of effective pandemic prevention and control measures, China took the lead in resuming work and production, thus filling the global output gap and the surplus recovered quickly.

Second, trade in services posted a declining deficit. In 2020, the deficit of trade in service was US$145.3 billion, down by 44% year on year. In particular, travel services posted a deficit of US$116.2 billion, a decline of 47% year on year. It’s mainly attributed to plunge of receipts and payments and restrictions on cross-border travel due to the COVID-19 pandemic.

Third, direct investment continued with the relatively high surplus, while portfolio investment was active in both directions. In 2020, direct investment recorded a surplus of US$103.4 billion, up by 78% year on year, in which, outbound direct investment was US$109.6 billion, witnessing an increase of 12% from the same period last year. Outbound investment made by domestic entities remained rational and orderly. Foreign direct investment reached US$213 billion, up by 37% year on year, indicating that foreign investors are optimistic about the long-term development potential of China’s economy. The two-way flows under portfolio investment became more active, posting growth in both outbound and inbound portfolio investment.

In summary, China is accelerating the building of a new development pattern, featured as domination by domestic cycle and mutual promotion between domestic and international cycle. Efforts will be made to coordinate domestic and foreign demands, imports and exports, outbound and inbound investments, which will contribute to the equilibrium of balance of payments.