SAFE sees declining surplus
By Zhang Fengming |
July 9, 2010, Friday
|
Print Edition
Print Edition
CHINA'S current-account surplus is expected to decline in 2010 for the second year as domestic demand increases its contribution to the economy, the State Administration of Foreign Exchange said yesterday.
China's international payment imbalance is expected to improve this year as the current-account surplus narrows, SAFE said on its website. The current-account surplus's contribution to the economy is likely to drop this year.
The current-account surplus, or measure on trade, amounted to 6.1 percent of China's gross domestic product last year, down from 9.6 percent in 2008.
But SAFE pointed out that China still "faces an arduous mission to balance its international payments."
In the first quarter, the surplus dropped 32 percent to US$53.6 billion, while the capital and financial account reversed a deficit of US$12.8 billion to a surplus of US$64.2 billion.
"Companies and individuals are set to increase yuan-backed assets and foreign currency-denominated liabilities against the backdrop of an appreciating yuan and the interest rate spread between home and abroad," SAFE said.
Speculation of the yuan's possible appreciation and the relatively higher interest rates in China are drawing foreign capital into China as it seeks better returns.
The yuan has risen 0.7 percent to 6.7760 against the greenback since China relaxed a two-year de facto peg to the US currency.
China's international payment imbalance is expected to improve this year as the current-account surplus narrows, SAFE said on its website. The current-account surplus's contribution to the economy is likely to drop this year.
The current-account surplus, or measure on trade, amounted to 6.1 percent of China's gross domestic product last year, down from 9.6 percent in 2008.
But SAFE pointed out that China still "faces an arduous mission to balance its international payments."
In the first quarter, the surplus dropped 32 percent to US$53.6 billion, while the capital and financial account reversed a deficit of US$12.8 billion to a surplus of US$64.2 billion.
"Companies and individuals are set to increase yuan-backed assets and foreign currency-denominated liabilities against the backdrop of an appreciating yuan and the interest rate spread between home and abroad," SAFE said.
Speculation of the yuan's possible appreciation and the relatively higher interest rates in China are drawing foreign capital into China as it seeks better returns.
The yuan has risen 0.7 percent to 6.7760 against the greenback since China relaxed a two-year de facto peg to the US currency.
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