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Foreign money to head to China
By Leo Zhang |
April 19, 2010, Monday
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Online Edition
Online Edition
CHINA will encounter an increased capital inflow this year on growing expectations of the yuan's appreciation and optimism in the country's economic expansion, the state foreign-exchange regulator said today.
The country's trade surplus will be further curbed this year as the country restructures its economy and encourages more domestic companies to invest overseas, the State Administration of Foreign Exchange said in its balance-of-payments report.
China's current account surplus reached US$297.1 billion last year, compared with US$436.1 billion in 2008, the report said. Capital and financial account surplus amounted to US$144.8 billion in 2009, up from US$19 billion a year before.
"The relatively high domestic interest rates and mounting expectations of the yuan's rise will boost the size of capital seeking cross-border carry trade," SAFE said.
China posted its first trade deficit in six years in March thanks to a surge in imports of commodities and consumer goods. Exports in March increased 24.3 percent from a year earlier to US$112.1 billion, while imports climbed 66 percent to US$119.3 billion.
SAFE said it expects a smaller current-account surplus against China's gross domestic product this year. The nation's international balance of payments will be further improved as it continues to shifts to a consumption-driven economic growth mode, the report said.
The foreign-exchange regulator also said the country faces an urgent task to manage inflation expectations and stabilize consumer prices on its way to economic restructuring with many uncertainties in the global financial environment.
The country's trade surplus will be further curbed this year as the country restructures its economy and encourages more domestic companies to invest overseas, the State Administration of Foreign Exchange said in its balance-of-payments report.
China's current account surplus reached US$297.1 billion last year, compared with US$436.1 billion in 2008, the report said. Capital and financial account surplus amounted to US$144.8 billion in 2009, up from US$19 billion a year before.
"The relatively high domestic interest rates and mounting expectations of the yuan's rise will boost the size of capital seeking cross-border carry trade," SAFE said.
China posted its first trade deficit in six years in March thanks to a surge in imports of commodities and consumer goods. Exports in March increased 24.3 percent from a year earlier to US$112.1 billion, while imports climbed 66 percent to US$119.3 billion.
SAFE said it expects a smaller current-account surplus against China's gross domestic product this year. The nation's international balance of payments will be further improved as it continues to shifts to a consumption-driven economic growth mode, the report said.
The foreign-exchange regulator also said the country faces an urgent task to manage inflation expectations and stabilize consumer prices on its way to economic restructuring with many uncertainties in the global financial environment.
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