China’s Current Account Returns to Surplus

China’s current account (CA) returned to a small surplus, $5.3bn in Q2 after the first quarterly deficit in Q1 2018 since 2001 as per data released by “State Administration of Foreign Exchange”.

The CA surplus in Q2 was driven by the goods trade components. Year-on-year export growth was slower than import growth in Q2, but the value of exports was much bigger than that of imports and has helped to widen the trade surplus. The growing services trade deficit, which includes outbound tourism, education, entertainment as well as purchases of foreign technologies and patents, highlights the changing nature of China’s economy, even as it remains the world’s largest exporter.