Cover News:

How do you evaluate the balance of payments in the current account? What is your judgement on future trends of the current account? Thank you. 

Jia Ning:

Thank you for your concern about China's current account. The current account is an important indicator showing whether a country balances its internal and external economies well. Since this year, China's current account has kept a reasonable surplus, indicating that the balanced pattern of internal and external economies has been further consolidated. Just now, Mrs. Li introduced China's current account surplus as a share of GDP and the main components of the current account in the first half of this year. In recent years, China has given full play to relative advantages in industrial and supply chains, increased competitiveness in foreign trade and has boosted productive service industries' exports. At the same time, relying on consumption potential of a large domestic market, global trade partners fully enjoy China's development opportunities, as well as advance balanced development of China's imports and exports. Looking ahead, China's current account will continue the development trend of expanding scale and basic balance, which will help maintain the balance of payments and the sound operation of the foreign exchange market. 

First, China's imports and exports in goods is expected to grow steadily, with the surplus of trade staying relatively stable. In terms of exports, on one hand, the global economy has seen moderate recovery and foreign demand still drives exports. According to predictions by the World Trade Organization, the growth rate of global trade next year will be 3%, up 0.3 percentage point compared to this year. At the same time, the replenishment cycle in developed economies is not yet complete, and the digital consumption market is expected to remain moderate, which supports China's exports. On the other hand, endogenous dynamics of export development is still strong. China has a comprehensive industrial system, which has been deeply integrated into global supply chains and value chains over the years. China's traded goods have become more diverse, with improved structure and diverse trade partners. In terms of imports, the performance of China's domestic economy sustains a recovery trend, further unleashing consumption vitality while increasing needs for international goods. At the same time, China in recent years has carried out a series of policies and measures to further expand imports, opening the door for the world to get access to China's market and further increasing the volume of imports. In general, under the combined effect of favorable internal and external factors, the total volume of China's foreign trade of goods will continue to remain at the forefront of the world, and the trade balance will develop in a more balanced direction.

Second, the structure of service trade balance is gradually improving, and the trade balance is expected to improve. In recent years, China has been promoting both industrial transformation and upgrading, fostering the deep integration of the service industry with the manufacturing sector. High-end services such as the digital economy and intellectual property rights have both seen acceleration in their development, leading to steady growth in service trade exports. In the first three quarters of 2024, the cross-border revenue from telecommunication, computer and information services, as well as business services, totaled $123.6 billion, representing a year-on-year increase of 6.8%. Revenue from intellectual property usage fees reached $9.1 billion, up 5.5% year on year. Another major component of service trade is travel, where outbound tourism and studying abroad have both seen steady recovery, nearly returning to pre-pandemic levels. Future growth rates are expected to be moderate. Moreover, since the beginning of this year, China has continued to optimize services for foreign personnel coming to China, expanding visa facilitation, which has contributed to rapid growth in revenue with cross-border travel. This trend is likely to continue and help narrow trade deficits with travel in the future. 

Thank you.