China 2017 account surplus gets a boost

Business | Janice Huang and Reuters 9 Feb 2018

The State Administration of Foreign Exchange said China's preliminary current account surplus in 2017 reached to US$172 billion (HK$1.34 trillion).

The preliminary figures for the current account surplus in 2017 is equivalent to 1.4 percent of GDP. The non-reserve financial account deficit in the fourth quarter of 2017 was HK$29.6 billion, and the capital, financial account deficit in the fourth quarter was US$62.2 billion, according to the SAFE.

The SAFE said China's foreign exchange reserves will remain stable overall as cross-border capital flows become more balanced.

China's trade machine kicked up a gear in January after stumbling the previous month, with exports and imports both growing much more than expected, pointing to a strong start to the year for global demand.

Yesterday's robust data, along with last week's strong manufacturing and service surveys, suggest China's economy remained resilient at the start of 2018 and may even have picked up some momentum, despite crackdowns on factory pollution and riskier financing that are driving up borrowing costs.

Exports in January rose 11.1 percent from a year earlier, picking up from a 10.9 percent gain in December, official data showed. Analysts had expected growth to cool for a second straight month to 9.6 percent.

Imports surged 36.9 percent, the General Administration of Customs said, the fastest pace since last February and smashing analysts' forecast of 9.8 percent growth.

China's import growth had fallen sharply to 4.5 percent in December, raising fears its domestic demand was slumping as Beijing forced northern smelters and mills to cut production to reduce thick winter smog.

Commodities again led the way in January, with China's crude oil imports hitting a record and iron ore imports at the second highest on record.

Some of the jumps in imports may have been due to inventory building ahead of the holidays, not a rise in consumption, though economists cited positive data.

"January trade data may be affected by the always changing timing of the Chinese New Year holiday...(but) such strong import data indicates that domestic demand momentum remains healthy going into 2018," said Louis Kuijs, head of Asia economics at Oxford Economics.

Meanwhile, HSBC said China issued 248.6 billion yuan (HK$307.51 billion) worth of green bonds last year, becoming the world's second largest market for green bonds.

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