{
  "title": "The Drivers, Implications and Outlook for China’s Shrinking Current Account Surplus",
  "publication": "IMF Working Papers, November 8, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/11/08/the-drivers-implications-and-outlook-for-chinas-shrinking-current-account-surplus-48712",
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  "summary": "China’s current account surplus has declined significantly from its peak in 2008 and the external position in 2018 was in line with medium-term fundamentals and desirable policies.",
  "sections": [
    {
      "heading": "Executive summary",
      "content": "- China’s current account surplus has declined significantly from its peak in 2008.\n- The external position in 2018 was in line with medium-term fundamentals and desirable policies.\n- Analysis is based on data as of July 2019."
    },
    {
      "heading": "Main drivers of the decline",
      "content": "- Structural rebalancing from investment to consumption.\n- Appreciation of the real effective exchange rate (REER) towards equilibrium.\n- Increase in outbound tourism.\n- Moderation in goods surplus reflecting market saturation and China’s faster growth compared with trading partners.\n- Cyclical factors and expansionary credit and fiscal policies also contributed."
    },
    {
      "heading": "Macroeconomic and external implications",
      "content": "- The decline has lowered global imbalances, with heterogeneous impacts across countries.\n- China’s external position in 2018 aligned with medium-term fundamentals and desirable policies, implying reduced need for corrective external adjustment.\n- The moderation in goods surplus reflects both demand- and supply-side factors including market saturation and relative growth dynamics."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Continue rebalancing policies toward consumption to sustain the structural decline in the surplus.\n- Continue opening up the economy to ensure excessive surpluses do not return.\n- Prepare the economy and the financial system to handle more volatile capital flows as external integration increases."
    },
    {
      "heading": "Publication and metadata",
      "content": "- By Pragyan Deb, Albe Gjonbalaj, Swarnali A Hannan\n- November 8, 2019\n- Pages: 25\n- Volume: 2019\n- Issue: 244\n- Series: Working Paper No. 2019/244\n- DOI: https://doi.org/10.5089/9781513516097.001\n- Stock No: WPIEA2019244\n- ISBN: 9781513516097\n- ISSN: 1018-5941\n\nSource: IMF Working Paper \"The Drivers, Implications and Outlook for China’s Shrinking Current Account Surplus\", data as of July 2019.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/11/08/the-drivers-implications-and-outlook-for-chinas-shrinking-current-account-surplus-48712"
    }
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    "Authors: Pragyan Deb, Albe Gjonbalaj, Swarnali A Hannan",
    "Published: November 8, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513516097.001",
    "China’s current account surplus has declined significantly from its peak in 2008.",
    "The external position in 2018 was in line with medium-term fundamentals and desirable policies.",
    "Analysis is based on data as of July 2019.",
    "Structural rebalancing from investment to consumption.",
    "Appreciation of the real effective exchange rate (REER) towards equilibrium.",
    "Increase in outbound tourism.",
    "Moderation in goods surplus reflecting market saturation and China’s faster growth compared with trading partners.",
    "Cyclical factors and expansionary credit and fiscal policies also contributed.",
    "The decline has lowered global imbalances, with heterogeneous impacts across countries.",
    "China’s external position in 2018 aligned with medium-term fundamentals and desirable policies, implying reduced need for corrective external adjustment.",
    "The moderation in goods surplus reflects both demand- and supply-side factors including market saturation and relative growth dynamics.",
    "Continue rebalancing policies toward consumption to sustain the structural decline in the surplus.",
    "Continue opening up the economy to ensure excessive surpluses do not return.",
    "Prepare the economy and the financial system to handle more volatile capital flows as external integration increases.",
    "By Pragyan Deb, Albe Gjonbalaj, Swarnali A Hannan",
    "November 8, 2019",
    "Pages: 25",
    "Volume: 2019",
    "Issue: 244",
    "Series: Working Paper No. 2019/244",
    "DOI: https://doi.org/10.5089/9781513516097.001",
    "Stock No: WPIEA2019244",
    "ISBN: 9781513516097",
    "ISSN: 1018-5941",
    "**Working Paper**"
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