China is always at the trade war with the US. However, the present report says that China’s current account deficits in the first half of the year with $28.3 billion. This is the first time with China in the record of 20-years, as the second largest economy of the world.
This year, China records in the first quarter with a great deficit in its current account. China in the past 20-years is popular globally as top exporters of goods. However, China encountered a deficit in its exports just within the first half of this year.
In the January-June period, the deficit in the current account of China stood at $28.3 billion, which a great fall from the first quarters’ $34.1 billion, reports SAFE (State Administration of Foreign Exchange) in a statement.
Three months earlier, the service trade of China met a deficit of $147.3 billion from the amount of $73.6 billion. The spending on transport, intellectual property rights, and trips were the main reasons behind the deficit, reports state-run Xinhua news.
In H1 2018, China had gained in goods trade of $155.9 billion. Therefore, it is for the first time in 20-years that China experiencing such a deficit, which it had always gained high from the selling of goods, said Caixin Magazine.
China’s current account surplus has been progressively shrinking since the 2008 economic crisis as the country to minimize dependence and exports started maximizing domestic consumptions. It is the mainstay of the country’s economic growth.
Since 2007, the overall trade and current account surplus in China have significantly fallen as its GDP percentage, which has declined from 9.9% to 1.3% in 2017, reports SAFE.
The trade tension between US and China started increasing at rapidly and encountered a deficit recently.
Caixin expressed Economic Chief of ‘Ping An Securities’ Zhang Ming that as under the pressure of goods trade, serve trade continues to expand. His predictions about the more deficits of China in its current trade account. He continued that it reflects a decline in domestic savings rate of the country, which can be partly because of the aged population.
Considering the trade condition of China, US President Donald Trump continue giving pressure on Beijing with the threats to enforce tariffs on China goods. That will automatically reduce the deficit in trade, which will amount to almost USD 375 billion last year. However, China also threatened its retaliation to protect its interest after concerning the impacts on its US product exports.
In yesterday’s report, SAFE expressed that China’s international payments balance is within the limits, which will continue to remain steady and reasonable. The date projects second quarter’s inflow of stable cross-border capital.
The country’s financial account maintains a new inflow couple with a surplus of USD 18.2 billion. However, the direct foreign investment of China stood at USD 58.6 billion.