China Deficit Shrinks in Q3

China’s capital and financial account remained in deficit in the third quarter as a result of the global financial crisis and a domestic economic slowdown, the country’s foreign exchange regulator said Friday.

The capital and financial account deficit shrank to 71 billion U.S. dollars from 71.4 billion U.S. dollars in the second quarter, the State Administration of Foreign Exchange (SAFE) said in an online statement.

It said the surplus was mainly a result of global financial headwinds and the domestic slowdown and does not suggest “capital flight.”

The surplus showed that foreign exchange assets are gradually shifting from the central bank to institutions and individuals, SAFE said.

Meanwhile, China’s current account surplus reached 70.6 billion U.S. dollars during the July-September period, the regulator SAID.

In the first nine months, the current account surplus came in at 147.8 billion U.S. dollars, accounting for 2.6 percent of China’s GDP during the period, down 0.3 percentage points year on year, the regulator said.

Excluding the effect of changes in exchange rates and asset prices, the country’s international reserve assets shed 400 million U.S. dollars in the third quarter.

Foreign exchange reserves increased by 300 million U.S. dollars during the period, with reserves in the International Monetary Fund (IMF) and special drawing right (SDR) both decreasing by 800 million U.S. dollars.

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