China's Current-Account Surplus Fell in 2009
By ANDREW BATSON
BEIJING -- China's current-account surplus, the broadest measure of its trade balance, fell sharply in 2009, the government said Friday, reflecting the dramatic economic adjustments forced by the global financial crisis.
According to preliminary estimates by the State Administration of Foreign Exchange, the current-account surplus dropped to $284.1 billion, down by about a third from the previously reported surplus of a record $426.1 billion for 2008. It was the first outright decline in the surplus since 2001.
The narrowing of China's current-account surplus over the past year has been applauded by many analysts who think the combination of big U.S. deficits and large surpluses in China and some other nations is destabilizing for the global economy. The Group of 20 major economies is trying to find ways to reduce these so-called "global imbalances."
The main driver of the shift in 2009 was the shrinking of the trade surplus to $249.3 billion yuan, from $368.7 billion in 2008, according to SAFE's figures. China's exports fell last year as global demand collapsed, but the nation's stimulus plan helped support imports. The total figure for the current-account surplus also includes a deficit in trade in services of $28.7 billion, as well as income from abroad and other transfers.
In relative terms, China's current-account surplus shrank to 5.8% of annual gross domestic product in 2009 from 9.4% of GDP in 2008, which itself was a decline from the peak of 11% of GDP in 2007.
However, some economists think China's current-account surplus could start to rise again this year. China's exports have started to recover in recent months, and authorities have been reluctant to take measures – such as allowing the currency to appreciate – that economists argue would help shrink the surplus.
SAFE also said China ran a surplus on the capital account of $109.1 billion in 2009, a sharp increase from $18.96 billion in 2008, though shy of the record $110.66 billion in 2004. The capital account includes foreign investment and other financial transactions.
The agency also offered some new detail on the accumulation of China's foreign-exchange reserves, which increase when the central bank buys up money coming into the country on either the capital or current accounts.
If the impact of currency moves and price changes on the value of the reserves are stripped away, and only new transactions are recorded, SAFE said, the reserves increased by $382.1 billion in 2009. That compares to an increase of $453.12 billion in the nominal value of the reserves over 2009, according to statistics from the central bank.
Write to Andrew Batson at andrew.batson@wsj.com
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