Economic Daily:

What are the new features and changes in China's international balance of payments in recent years? What will the trends be in the future? Thank you.

Li Hongyan:

Thank you for your questions; I'm happy to address them. The international balance of payments is a highly important indicator reflecting both domestic and external balance of an economy. It has been attracting widespread attention from markets, while its monitoring and analysis have been a focus of our work. Since the 18th CPC National Congress, China's economic strength has seen a historic leap, laying a solid foundation for the steady operation of the international balance of payments. In general, there are several features: the current account surplus is reasonable and balanced, cross-border investment is more active, an independent equilibrium has been maintained in the balance of payments, and foreign exchange reserves rank first in the world. Specifically:

First, the current account balance has expanded significantly, and has shown greater stability. In recent years, China has continuously promoted industrial transformation and upgrading, fostered integration between the service and manufacturing industries, and showed steady growth in exports. As the economy has developed and people's living standards have improved, China's import demand for overseas goods and services has also increased. In 2023, China's current account balance exceeded $7.3 trillion, an increase of 60% compared with 2012. At the same time, with the increasingly balanced, coordinated and sustainable economic development, China's current account surplus to gross domestic product (GDP) ratio has maintained at around 2% in recent years, which is within a reasonable and balanced range.

Second, two-way cross-border investment has become increasingly robust. In terms of direct investment, Chinese enterprises have strengthened their global presence and expanded their capital outflows. The stock of foreign direct investment (FDI) has leapt from 12th in 2012 to fourth in 2023 globally. China has also maintained its position as an important destination for foreign investors, with its investment stock ranking second in the world, while its investment structure has been continuously optimized. Concerning securities investment, the two-way opening of the financial market has progressed steadily, and the asset allocation demand of domestic and overseas investors has increased significantly. By the end of 2023, cross-border securities investment accounted for 17% of China's total foreign assets and liabilities, up 8 percentage points from 2012.

Third, an independent equilibrium has been maintained in the balance of payments. In recent years, the market-oriented formation mechanism of the RMB exchange rate has been continuously improved, the flexibility of the exchange rate has been continuously enhanced, and the automatic stabilizer function of the exchange rate in adjusting the international balance of payments has been continuously optimized. With the reform and development of the foreign exchange market, the ability of enterprise exchange rate risk management has significantly enhanced, and foreign exchange market transactions have become more rational and orderly. The balance of payments has gradually shifted from a pattern of surplus in both the current and capital accounts to a more balanced position with surplus in one and deficits in the other," maintaining a basic stability in foreign exchange reserves.

Looking ahead, China will further deepen reform comprehensively, continuously transform and upgrade its economic structure, and strengthen the resilience of its foreign exchange market. Under the support of these favorable factors, China's international balance of payments will continue to show a pattern of larger scale, optimized structure and basic equilibrium. At the same time, we will pay close attention to the changing situation, optimize the risk warning and response mechanism, guard against the risks of abnormal flow of cross-border funds, and safeguard China's economic and financial security. Thank you.