China Current Account Shows Shift from Exports
By wchung | 12 Jun, 2026

The shrinking current account surplus show that China is lessening its dependence on exports, said People’s Bank Governor Zhou Xiaochuan Monday at a Beijing economic forum.

This year’s current-account surplus is expected to be only about 4% of GDP, according to Zhou. That represents a sharp decline from about 10% in 2007 and 5.2% in 2010.

In fact, for the first three quarters of 2011 the current-account surplus was only 2.8% though it typically jumps during Q4 when foreign payments surge on holiday exports, bringing up the full-year percentage.

Zhou also expects the current-account surplus to be boosted by a hefty increase in foreign direct investments due to excess liquicity and weak growth in developed economies.

As China moves toward balance in international payments China might ease restrictions on the use of foreign exchange by its citizens, said Zhou. This would facilitate their ability to make timely overseas investments. However, he did not provide a timeline for such easing of foreign-exchange restrictions.

Before China’s economy can be restructured for more balanced trade the country must become more technologically innovative and raise the quality of its workforce, said Song Hong, an international trade expert with the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. He dismissed this year’s sharp decline in trade surplus as being attributable mainly to external pressures like high commodity prices and trade frictions.

On the other hand, Tsinghua University researcher Yuan Gangming believes the current-account surplus will be even lower than the 4% projected by Zhou due to the impact of tight credit on the growth of the export manufacturing sector, especially in Wenzhou.

But China’s Manufacturing Purchasing Managers Index, which measures manufacturing activity, rebounded strongly to 51.1 from 49.9 in September, according to Monday’s report from HSBC Holdings. That data prompted the assessment that China faces no risk of a hard landing despite the slowing of GDP growth to 9.1% in Q3 from 9.5% in Q2 and 9.7% in Q1.

However, growth is expected to slow further to 8.6 percent in 2012 from 9.3 percent this year, according to a Reuters poll of financial analysts whose generally endorse the view of a soft landing rather than a hard one. A GDP growth rate of under 8% would generally be considered a hard landing for China that could produce unemployment.

Premier Wen Jiabao has said that the government is making job creation a more urgent priority, suggesting that further tightening is unlikely despite inflation lingering in the 5.5% range.