Cover News:

The current account has always played an active role in stabilizing China's balance of payments and the foreign exchange market. What is your judgment on the future development trends of China's current account? Thank you.

Wang Chunying:

Thank you for your question. Your question is also our concern. Current account transactions are closely linked to the real economy. The balance of trade in goods and services under the current account is directly involved in national accounts and plays an important role in maintaining the balance of payments.

Based on the situation in the first quarter of this year, the current account surplus remains within a reasonable and balanced range. According to preliminary statistics, the trade surplus in goods and services exceeded US$60 billion in the first quarter, which for the same period in history is at a relatively high level. With this support, the current account had a remaining surplus in this year's first quarter.

Looking ahead, China's current account has the foundation and conditions to sustain a certain scale of reasonable surplus. We would like to analyze it in the following areas:

First, the trade surplus in goods will remain at a relatively high level. We believe there are two supporting factors. On the one hand, there is structural support, and on the other hand, there is support from cyclical factors. First, there are new growth drivers in exports. With the transformation and upgrading of China's industries, the performance of export with high-end manufacturing products, new energy vehicles, etc. has been very impressive this year. Another feature is our trade methods. New trade models such as cross-border e-commerce, market procurement and other new trade formats continue to expand. In addition, the performance of traditional export markets is relatively stable. At the same time, emerging markets along the Belt and Road are rapidly expanding, and our trading partners are more diversified. From the perspective of cyclical factors, the current demand for increasing inventories in developed economies such as the United States has begun to arise, and the global electronic product consumption cycle has bottomed out. These will further boost exports of various Chinese products.

Second, the structure of trade in services has been optimized, and the role of trade in producer services has become more prominent. Travel is an important component in trade- in services. As residents' cross-border activities resume, cross-border travel expenditure is recovering on a regular basis. On the other hand, China has already adopted a visa-free policy for many countries. At the same time, the PBC, the SAFE, among other departments, are promoting more convenient payment services for overseas visitors, a move that is expected to incentivize increased inbound tourism. In the first quarter of this year, China's travel revenue increased by about 30% year-on-year, and it is expected to continue to maintain an upward momentum. More importantly, in recent years, trade in services has developed with high quality, and exports of producer services have increased steadily. Last year, China's trade surplus in telecommunications, computer, information services and commercial services totaled US$57.2 billion, which was a historic high. It has continued to grow in the first quarter of this year. This will also help the balance of trade in services.

In the medium to long term, the trajectory of a country's current account is shaped by its economic structure and the caliber of its manufacturing sector. First, the current account reflects the relationship between savings and investment. At present, China's savings rate is at a relatively high level. It is anticipated that the positive disparity between savings and investment rates will persist, fostering a reasonable surplus in the current account. Second, as China's manufacturing industry is undergoing transformation, upgrading and high-quality development, it will gradually enhance the competitiveness of our products. This shift is expected to reduce reliance on some imported products, underpinning a stable medium- to long-term outlook for the current account, which encompasses trade in goods. We believe that China's current account is well-positioned to maintain a reasonable surplus moving forward. Thank you.