## People’s Republic of China: Selected Issues

_IMF Staff Country Reports, August 23, 2019_

## Source details

**Canonical URL:** [People’s Republic of China: Selected Issues](https://www.imf.org/en/publications/cr/issues/2019/08/15/peoples-republic-of-china-selected-issues-48593)

## Other formats

- [Markdown version](/en/publications/cr/issues/2019/08/15/peoples-republic-of-china-selected-issues-48593/index.md)
- [Structured JSON version](/en/publications/cr/issues/2019/08/15/peoples-republic-of-china-selected-issues-48593/index.json)
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## Bibliographic details
- Published: August 23, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513511252.002

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### Summary findings
- The paper focuses on the drivers, implications and outlook for China’s shrinking current account surplus.
- Although cyclical factors helped in 2018, the trend decline has been largely structural.
- Further declines in the current account surplus will reduce excess global imbalances—a positive development for global stability.

### Drivers of the shrinking current account surplus
- Rebalancing of the Chinese economy away from investment toward consumption.
- Appreciation of the real effective exchange rate toward equilibrium.
- Increase in outbound tourism.
- Moderation in goods surplus reflecting market saturation and China’s faster growth compared with trading partners.
- Cyclical factors provided support in 2018, but the predominant forces are structural.

### Global implications and country‑level effects
- The decline in China’s surplus has lowered global imbalances.
- Effects vary across countries:
  - Korea: trade balance improved vis-à-vis China.
  - Germany: trade balance improved vis-à-vis China.
  - Brazil: trade balance improved vis-à-vis China.
  - Japan: trade balance deteriorated vis-à-vis China.
  - India: trade balance deteriorated vis-à-vis China.
  - Indonesia: trade balance deteriorated vis-à-vis China.

### Policy recommendations
- Focus on continued rebalancing to sustain the shift toward domestic demand.
- Continue opening the economy to ensure excessive surpluses do not return.
- Prepare the economy and the financial system to handle more volatile capital flows.

### Outlook
- The trend decline in China’s current account surplus is expected to continue unless structural drivers reverse.
- Ongoing declines would contribute to lower global imbalances and enhanced global stability.

*Source: People’s Republic of China: Selected Issues (IMF Staff Country Report).*

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## Content in this bundle

- **People’s Republic of China: Selected Issues; IMF Country Report No. 19/274; July 12, 2019**
  - [People’s Republic of China: Selected Issues; IMF Country Report No. 19/274; July 12, 2019 (Markdown version)](/-/media/files/publications/cr/2019/1chnea2019004.pdf.md){rel="alternate" type="text/markdown"}
  - [People’s Republic of China: Selected Issues; IMF Country Report No. 19/274; July 12, 2019 (PDF)](/-/media/files/publications/cr/2019/1chnea2019004.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2019/08/15/peoples-republic-of-china-selected-issues-48593_