China Current Account

China’s current account deficit historically has been more surpluses than deficits.  As shown in the graph to the left, since  1982, China’s current account balance has been close to zero.  It was not until the most recent years, around about 2000-2001 that China’s surplus has started to rise dramatically.  Now, China’s current account surplus is over 350 billion USD.

Currently, China’s Cash surplus in terms of GDP is -2.12 %.

Here is a recent article about China’s Current Account.  It comes from the Wall Street Journal:

BEIJING—China’s current-account surplus in the third quarter more than doubled from a year earlier, its foreign-exchange regulator said Thursday, indicating the country still faces challenges in rebalancing the economy away from a reliance on external demand.

The current-account surplus—the broadest measure of China’s trade balance with the outside world—was $102.3 billion in the third quarter, the State Administration of Foreign Exchange said in a statement.

In the second quarter the surplus was $72.9 billion, up 35% from a year earlier, which was a sharp rebound from the first quarter, when it fell 32% from a year earlier.

The rebounding surplus may reinforce concerns, voiced by some economists in recent months, that China’s external imbalances are returning to pre-crisis levels after temporarily declining during the global economic downturn. Such concerns could, in turn, put further pressure on China to allow faster yuan appreciation.

The third quarter’s current-account surplus was equivalent to 7.2% of gross domestic product, according to a Dow Jones Newswires calculation, compared with 5.5% of GDP in the second quarter and 4.5% in the first quarter.

“China was making the argument that since the current-account surplus was falling as a percent of GDP, that indicates the yuan isn’t undervalued,” said Tom Orlik, an economist with Stone & McCarthy Research Associates. “Now that it is rising again, it puts them in a difficult position.”

The capital and financial account surplus—a measure of net capital inflows—fell in the third quarter to $5.7 billion, SAFE said in the statement, from $25.8 billion in the second quarter.

China’s foreign-exchange reserves rose by $107.3 billion in the third quarter, SAFE said, excluding the effect of exchange-rate movements and asset prices. The value of the country’s total international reserves, which includes foreign-exchange reserves as well as reserves held at international financial institutions, rose by $108 billion in the third quarter, it said.

Including the effect of exchange rate and asset price changes, China’s foreign-exchange reserves rose by $194 billion in the third quarter to $2.648 trillion, the People’s Bank of China said in October.