China Posts Capital Account Deficit in Q2

China’s capital and financial account shifted to a deficit of 71.4 billion U.S. dollars in the second quarter this year from a surplus of 56.1 billion U.S. dollars in the first quarter, foreign exchange regulators said Tuesday.

The capital and financial account deficit was 20.3 billion U.S. dollars in the first half, the State Administration of Foreign Exchange said.

“The country has suffered a certain degree of capital outflow in the first half, but this does not suggest a massive retreat of foreign investment,” it said in a statement on its website.

The country’s current account surplus widened to 59.7 billion U.S. dollars in the second quarter from 23.5 billion U.S. dollars in the first quarter, it said.

The current account surplus in the first half of the year was 83.2 billion U.S. dollars, down 5 percent from one year earlier. The surplus was equivalent to 2.3 percent of the country’s GDP in the first half, down from 2.8 percent in the same period of 2011, offering new evidence that the world’s second-largest economy is relying less on external demand.

However, the statement said China’s trade surplus might continue to widen in the second half, as continuously falling commodity prices on the global market will help cut import costs.

The country’s trade surplus hit 68.91 billion U.S. dollars in the first six months, compared with 44.93 billion U.S. dollars a year ago, according to customs statistics.

via Xinhua

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza