The State Administration of Foreign Exchange (SAFE) has recently released the Balance of Payments (BOP) for the first quarter of 2021 as well as the International Investment Position (IIP) at the end of March 2021. The SAFE deputy administrator and press spokesperson Wang Chunying answered media questions on relevant issues.

Q: Could you brief us on China’s balance of payments for the first quarter of 2021?

A: In the first quarter of 2021, China’s current account surplus registered US$69.4 billion, with its ratio to GDP in the same period reaching 1.8%, which fell within a reasonable range. Two-way cross-border investments and financing were relatively active, and the balance of payments remained balanced.

First, trade in goods maintained a relatively high surplus. In the first quarter of 2021, due to great achievements in coordinating epidemic prevention and control, China’s economic and social development have reached remarkable results. Its foreign trade maintains a growing momentum and a trade surplus of US$118.7 billion in goods in terms of international payments. The export recorded US$694.2 billion, up by 49% year on year; imports reached US$575.5 billion, up 29% year on year.

Second, trade deficit in services narrowed. In the first quarter of 2021, the trade deficit in services registered US$22.2 billion, down by 53% year on year. The travel item deficit recorded US$24.2 billion, down by 42% year on year. The continued spread of the pandemic abroad accounted for the main reason, which resulted in continuous sluggish outbound travel, and the base of travel expenditures in early 2020 was relatively high.

Third, direct investment maintained a net inflow. In the first quarter of 2021, the net influx of direct investment registered US$75.7 billion, including US$97.6 billion of foreign direct investment in China, showing foreign investors’ confidence in China’s epidemic prevention and control, as well as its economic development prospects. China’s outward direct investment maintained stable and orderly, reaching US$21.9 billion.

Fourth, two-way cross-border securities investment was relatively active. In the first quarter of 2021, China’s outbound investment in securities amounted to US$71.7 billion, and overseas investment in Chinese securities reached US$75.2 billion. The related investment was active, reflecting that the two-way opening of China’s capital market has met the needs of asset allocation of both domestic and foreign investors.

At present, the global epidemic prevention and control and the global economic and financial situation are still confronting uncertainties and instabilities. However, with the steady improvement of China’s economy, China will maintain a basic balance of international payments.

Q: What would you say about China’s international investment position at the end of March 2021?

A: At the end of March 2021, China’s international investment position remained stable, and external financial assets and liabilities increased.

First, the total size of China’s external financial assets increased. By the end of March 2021, China posted external assets of US$8.8776 trillion, up by 2% from the end of 2020. Of which, assets under direct investment amounted to US$2.4319 trillion, up by 0.8%; assets under portfolio investment were US$965.8 billion, up by 7.3%; other investment assets, including foreign deposits and loans, hit US$2.1662 trillion, representing an increase of 7.5%; and reserve assets amounted to US$3.2971 trillion, still ranking first in the world.

Second, total external liabilities increased. At the end of March 2021, China’s external debt reached US$6.7375 trillion, up by 2.8% from the end of 2020. Of which, liabilities under direct investment amounted to US$3.2386 trillion, up by 1.9 percent; liabilities under portfolio investment reached US$2.0289 trillion, up by 3.8%; and liabilities under other investments including deposits and loans recorded US$1.4596 trillion, rising by 3.7%.