China Forex Regulator : 2011 Current Account Surplus Around 3% Of GDP
02/09/2012 | 06:06am China's foreign exchange regulator said Thursday the country's current account surplus likely fell to around 3% of gross domestic product in 2011, a sign of progress in the government's efforts to rebalance the economy toward domestic demand.
The nation's current account surplus--a broad measure of its trade surplus favored by economists--is down from over 10% of GDP in 2007 and around 5% in 2009 and 2010, the State Administration of Foreign Exchange said in a statement.
There are several factors behind the decline, both foreign and domestic as well as structural and cyclical, SAFE said.
Rising domestic demand is one factor behind the falling surplus, with consumption accounting for 52% of GDP growth in 2011, up from 37% in 2010, the statement said.
Global economic weakness since 2008 also contributed to the falling surplus, as it reduced external demand for the country's exports.
Net capital flows into China have also fallen, as economic weakness abroad has reduced speculative capital inflows while China's outbound investment has increased, the statement said.
In addition, expectations of one-way appreciation in the yuan have been "broken," and a pattern of two-way fluctuations in the exchange rate is starting to take shape, also contributing to fewer fund inflows and slower accumulation of foreign reserves, the statement said.
-By Aaron Back, Dow Jones Newswires; (8610) 8400-7701; aaron.back@dowjones.com
