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

Q: Could you brief us on China’s BOP for the first three quarters of 2021?

A: In the first three quarters, China maintained a basic balance in its international payments. The current account surplus stood at US$196.3 billion, with its ratio to Gross Domestic Product (GDP) reaching 1.5%, which continued to fall within a reasonable and balanced range. The cross-border two-way investment remained active.

First, trade in goods recorded a higher surplus and trade in services registered a narrower deficit. In the first three quarters of this year, trade in goods in terms of BOP recorded a surplus US$374.2 billion, up by 15% year on year. It is mainly because the sustained recovery of China’s economy and increased international demand have led to growth in both imports and exports compared with the same period of the previous year. Trade in services registered a deficit of US$82.5 billion, down by 29% year on year. This was mainly due to a 20% decrease in the travel deficit as the repeated global pandemic continued to curb cross-border movement of people. Besides, revenue from transport services grew faster than spending, and the transport deficit shrank by 41% year on year.

Second, outward investment and foreign investment in China were both robust. In the first three quarters, China’s outward direct investment remained stable at US$85.4 billion, while the foreign direct investment in China reached US$249.5 billion, reflecting overseas investors’ confidence in prospects of China’s economic development and their investment in China. Under the item of portfolio investment, China’s outward investment reached US$99.2 billion and attracted US$143.7 billion of inward investment. It showed that the two-way opening of China’s capital market has run smoothly and has met the needs of domestic and foreign investors for asset allocation. Under other investment items such as loans and deposits, China’s outward investment registered US$313.4 billion and the inward investment reached US$143 billion, both of which recorded historically high levels.

In general, with the external environment becoming more complex and grim, China has done well in coordinating the prevention and control of the COVID-19 with economic and social development. China’s economy is resilient, and the fundamentals of long-term positive development remain unchanged, which will help China maintain overall stability and basic balance in the international payments.

Q: What would you say about China’s IIP at the end of September 2021?

A: By the end of September 2021, China’s IIP remained stable. The external financial assets increased, and reserve assets continued to rank first in the world.

First, China’s total external financial assets increased. By the end of September 2021, China posted external assets of US$9.0566 trillion, up by 0.3% from the end of June; of that, assets under direct investment amounted to US$2.4685 trillion, rising by 0.3%; assets under portfolio investment were US$966.9 billion, declining by 4.6% due to changes in valuation; assets under other investments including overseas deposits and loans reached US$2.2344 trillion, increasing by 1.9%; and reserve assets reached US$3.373 trillion, up by 0.8%.

Second, total external liabilities slightly decreased. By the end of September 2021, China recorded external liabilities of US$7.0314 trillion, down by 0.1% from the end of June, mainly affected by exchange rate translation and changes in valuation. Liabilities under direct investment in China amounted to US$3.4223 trillion, with an increase of 1.7%; liabilities under portfolio investment were US$2.0548 trillion, down by 2.6%; and liabilities under other investments including deposits and loans absorbed reached US$1.5439 trillion, declining by 1%.