Surpassing Germany, China’s current account surplus ranks first in the world

The map of Surpassing Germany, China's current account surplus ranks first in the world shows the Haitian wharf of Xiamen port. (photo)

(Hong Kong Wenhui net reporter Hai Yan) China’s current account surplus (surplus) will more than double to $310 billion in 2020, surpassing Germany’s in the first place in the world, according to a study released by the Ifo Economic Research Institute in Munich on the 22nd local time.

China will release its current account and other balance of payments data in 2020 at the end of the first quarter. According to the data released by the State Administration of foreign exchange, the current account surplus in the first three quarters of 2020 is 170.7 billion US dollars, which is significantly higher than the level of 141.3 billion US dollars in 2019.

Wang Chunying, deputy director of the State Administration of foreign exchange, predicted that in the second half of 2020, China’s exports grew by 13% year-on-year, and the trade in goods maintained a relatively high surplus; at the same time, in the case of the epidemic situation has not been completely controlled, the travel expenditure shrank significantly, resulting in a significant decline in the trade in services deficit, and the current account continued a small surplus trend. The current account surplus in the third quarter was 922 It is estimated that it will remain at a similar level in the fourth quarter.

Prior to that, Germany’s current account surplus continued to rank first in the world for four years, which is mainly due to the strong demand for “made in Germany” in the international market. In 2020, China’s epidemic prevention and control was proper, the economy recovered rapidly, and the strong performance of foreign trade exports exceeded market expectations. Zhang Ming, deputy director of the Institute of finance of the Chinese Academy of Social Sciences, analyzed that the outbreak of the global epidemic has led to the rapid development of China’s medical equipment industry The export volume of the telecommuting industry has reached a record high; since the second quarter, China has become the only reliable intermediate node in the global industrial chain, making the important position of Chinese enterprises in the global industrial chain rise instead of decline in the short term, and the proportion of China’s exports in global imports will jump from 14% to 18% once in 2020; in addition, from the second half of 2020, global demand will rebound.

The combination of the above multiple favorable factors led to the rise of the trade surplus in goods and the decline of the trade deficit in services caused by the epidemic. Under the impact of the epidemic, China’s current account surplus exceeded expectations, reaching US $110.2 billion and US $92.2 billion in the second quarter and the third quarter of 2020, respectively, reaching a new high since the outbreak of the subprime mortgage crisis.

Looking forward to this year, Zhang Ming believes that China’s foreign trade will continue to grow steadily, but the momentum may be weaker than that in the second half of 2020. At the same time, the larger growth gap and interest rate gap between China and foreign countries will continue. In 2021, there may be a combination of small-scale current account surplus and large-scale financial account surplus in the balance of payments. The double surplus pattern will strongly support the exchange rate of RMB against the US dollar and the effective exchange rate.

However, in the long run, Zhang Ming reminds us that the acceleration of population aging will lead to the reversal of the savings and investment gap. Sooner or later, China will face a current account deficit. Changes in the domestic and international macroeconomic and financial situation may lead to frequent changes in short-term capital flows.

Editor in charge: Liang Cunxi

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