BOP 2017

In 2017, both the current account and the non-reserve financial account in the balance of payments posted a surplus. Specifically, the surplus under the current account as a percentage of GDP was 1.3 percent, a decline of 0.5 percentage point from the level in 2016, which was still within a reasonable zone. The non-reserve financial account posted a surplus of $148.6 billion, whereas it had posted a deficit of $416.1 billion in 2016.

I. The surplus under the current account declined

The surplus under trade in goods decreased slightly. In 2017, China's exports and imports of trade in goods amounted to $2,216.5 billion and $1,740.3 billion, a year-on-year increase of 11 percent and 16 percent, respectively. The surplus reached $476.1 billion, down by 3 percent.

The deficit of trade in services increased. In 2017, trade in services revenue reached $206.5 billion, down 1 percent year-on-year, and expenditures reached $471.9 billion, up 7 percent. The deficit reached $265.4 billion, increasing by 14 percent. Specifically, the deficit under transportation increased by 20 percent to $56.1 billion; while the deficit under travel increased by 9 percent to $225.1 billion.

The deficit in primary income shrank. In 2017, revenue under the primary income reached $257.3 billion, a year-on-year rise of 14 percent, whereas expenditures reached $291.8 billion, a rise of 8 percent. The deficit reached $34.4 billion, down by 22 percent. Specifically, employee compensation recorded a surplus of $15 billion, down 27 percent. Investment income registered a deficit of $49.9 billion, down by 23 percent. Outward investment revenue posted $234.9 billion, up by 18 percent and inward investment expenditures, including profits and dividends of foreign-funded enterprises, reached $284.8 billion, up by 8 percent.

The deficit in secondary income expanded. In 2017, the secondary income registered revenue of $28.6 billion, down 7 percent from the year 2016; whereas expenditures reached $40 billion, down 1 percent. The deficit reached $11.4 billion, up 20 percent.

II. The non-reserve financial account posted a surplus

Direct investment registered a surplus. In the balance of payments, direct investments posted a surplus of $66.3 billion in 2017, compared with a deficit of $41.7 billion in 2016. In particular, the net increase in direct investment assets amounted to $101.9 billion, down by 53 percent year-on-year. The net increase in direct investment liabilities posted $168.2 billion, down 4 percent.

The balance in portfolio investment changed from a deficit to a surplus. In 2017, portfolio investment recorded a surplus of $7.4 billion, while there was a deficit of $52.3 billion in 2016. Specifically, net outflows of outward portfolio investment (the net increase in assets) totaled $109.4 billion, up 6 percent, whereas net inflows of inward portfolio investment (the net increase in liabilities) reached $116.8 billion, an increase of 1.3 times.

Other investment recorded a surplus. In 2017, other investment, including loans, trade credits, and deposits, recorded a surplus of $74.4 billion, compared with a deficit of $316.7 billion in 2016. In particular, net outflows of outward other investment (the net increase in assets) reached $76.9 billion, down by 78 percent year-on-year, and net inflows of inward other investment (the net increase in liabilities) hit $151.3 billion, up 3.6 times.

III. Reserve assets grew steadily

In 2017, reserve assets involving transactions (excluding the effects of non-transactional values, such as the exchange rate and prices,) increased by $91.5 billion. Specifically, foreign exchange reserves involving transactions registered an increase of $93 billion. By the end of 2017, China's reserve assets totaled $3,139.9 billion, a rise of $129.4 billion since the end of 2016.

The balance of payments (BOP), also known as balance of international payments, summarizes all transactions that a country's individuals, companies, and government bodies complete with individuals, companies, and government bodies outside the country. These transactions consist of imports and exports of goods, services, and capital, as well as transfer payments, such as foreign aid and remittances.

The balance of payments divides transactions into two accounts: the current account and the capital account. The current account includes transactions in goods, services, investment income, and current transfers. The capital account, broadly defined, includes transactions in financial instruments and central bank reserves. Narrowly defined, it includes only transactions in financial instruments.