Home Business First Time In 20 years, China’s Imports Exceed Its Exports

First Time In 20 years, China’s Imports Exceed Its Exports

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BEIJING: Amid the trade war with the US, China has reported a current account deficit of $28.3 billion in the first half of this year, which is the first in 20 years for the world’s second largest economy.
China also recorded its first quarterly current account deficit in nearly 17 years this year, ending its dream run of accumulating trade surplus as top exporter for years and the deficit carried on to the first half of this year.

The deficit in the current account stood at $28.3 billion in the January-June period, down from $34.1 billion in the first quarter, the State Administration of Foreign Exchange (SAFE) said in a statement.

China’s service trade posted a deficit of $147.3 billion up from $73.6 billion three months earlier. The spending on trips, transport, and intellectual property rights contributed to the bulk of the deficit, state-run Xinhua news agency reported.

China however saw a goods trade surplus of $155.9 billion in H1 2018. This is the first half-year deficit in 20 years as spending on overseas services continued rising and outpaced income generated from the sale of goods by the world’s largest exporter, Caixin magazine reported.

The country’s current account surplus has been steadily shrinking since the 2008 economic crisis as it moved towards increasing domestic consumption to reduce dependence on declining exports, which were the mainstay of its economic growth. The world’s second largest economy posted 6.9 per cent GDP last year and the government has fixed 6.5 per cent as this year’s growth target.

China’s overall trade and current account surpluses have fallen significantly as a percentage of its GDP since 2007.

Its current account surplus declined from 9.9 per cent of GDP in 2007 to 1.3 per cent in 2017, according to the data of SAFE.

Analysts forecast a narrowing surplus or more frequent current account deficits against the backdrop of trade tensions between China and the US.

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