China's Economy (II)

choi

(2)
(a) China's economy | Disappearing Trick; The demise of China's current-account surplus will change the global economy. Economist, May 19, 2018.
https://www.economist.com/financ ... e-the-world-economy

Note:
(a) Only view the graphic and read a paragraph or two. That is enough. Suffice it to say that the Economist has followed the issue many times, the last time being approximately a year ago.
(b) 国家外汇管理局新闻发言人就2018年一季度国际收支状况答记者问. 国家外汇管理局, May 4, 2018
www.safe.gov.cn/wps/portal/!ut/p ... a75a37afbea2ebe8e37
("2018年一季度，经常账户逆差282亿美元，其中，国际收支口径的货物贸易顺差534亿美元，同比下降35%。分别看货物出口和进口，货物出口5296亿美元，同比增长11%；货物进口4762亿美元，同比增长21%。进口增长快于出口增长推动我国货物贸易更趋平衡，且受年初假日因素影响，一季度货物贸易差额一般为当年低值")

Which is "2001年以来首次季度 [quarterly] 逆差."
(c) Compare
Sue-Lin Wong, China Posts First Monthly Trade Deficit in Three Years as Imports Soar. Reuters, Mar 8, 2017
https://www.reuters.com/article/ ... trade-idUSKBN16F0HL
("China unexpectedly posted its first trade gap in three years in February as a construction boom pushed imports much higher than expected * * * China’s imports surged 38.1 percent from a year earlier, the biggest increase since February 2012, official data showed on Wednesday, while exports unexpectedly fell 1.3 percent.  That left the country with a trade deficit of $9.15 billion for the month, the General Administration of Customs said.  Most analysts, however, attributed the rare trade gap to distortions caused by the long Lunar New Year celebrations, which began in late January this year Chinese new year Jan 28, 2017]")

This looked into merchandise, not service, trade -- certainly just a small scope of current account. However, I can imagine that for that particular month, China's current account was negative (due to service trade deficit). Still for the QUARTER 1Q17, 国家外汇管理局 State Administration of Foreign Exchange (SAFE) said the current account was surplus.

choi

(b) Jason Furman, Don't Get Distracted by the Trade Deficit with China. Its external imbalances have been declining for a decade. The US should seek more of the same. Wall Street Journal, May 21, 2018 (op-ed)
https://www.wsj.com/articles/don ... th-china-1526841333

Quote:

"As China reformed its economy and entered the global trading system around the turn of the millennium, its current-account surplus rose from near zero to 10% of gross domestic product in 2007.  That was a stunning figure. As a share of the world economy, China's surplus was the largest for a single country in at least 40 years. Massive Chinese exports, fueled in large part by a substantial undervaluing of the yuan, led to 'China shock' with reverberations all around the globe.

"The White House's trade demand ignores how much this situation has changed. China's over-all current-account surplus has dropped to 1.4% of GDP last year. The International Monetary Fund estimates that by 2023 it will fall to 0.6% of GDP. The true numbers may be slightly larger after adjusting for some issues with the Chinese data (say, capital outflows disguised as tourist revenues), but the overall story is clear.  At first, China's rebalancing was driven by increased domestic investment * * * Since 2010, however, China has made real progress in shifting toward domestic consumption, a trend led by its increasingly wealthy and confident consumers.* * *

"Mr Furman, a professor of practice at the Harvard Kennedy School, was chairman of the White House Council of Economic Advisers, 2013-17.

Note:
(i) The essay is locked behind paywall, forcing me to type quotations. Besides, the essay, unlike the Economist article in (2)(a), does not mention 1Q18 data of China's. But my point is this: "The true numbers may be slightly larger after adjusting for some issues with the Chinese data (say, capital outflows disguised as tourist revenues)."  My understanding is the author means to say that China's surplus in merchandise export would have been slightly larger if Chinese do not disguise capital outflows (which can be for investments or bank accounts outside China) as the money Chinese tourists need to SPEND abroad -- but instead park the money within China.
(ii) Regarding quotation 1: "China's surplus was the largest for a single country in at least 40 years." Which country beat -- note the past tense -- China?   Taiwan, that is who.
(A) The historical data of current account surplus as % of GDP (nominal) in World Bank:

Current Account Balance (% of GDP).
https://data.worldbank.org/indicator/BN.CAB.XOKA.GD.ZS

has data for Japan (1996-2016 inclusive) and South Korea (1976-2016 inclusive), but not Taiwan.
(B) Quite a few companies have data for it; google with (Taiwan "current account surplus" GDP) and, in any search result (the following data about Taiwan, Japan and South Korea, all since 1980,  are from http://tradingeconomics.com), click "MAX" for maximal time span.  For Taiwan, the (ratio) peak was ~1986 (~21.5%), the second -highest peak was 2015 (~14%).

For Japan, the peak ~2007 (~4.6%) and the second highest peak ~1986 (~4.3%). For S Korea, the peak was ~1998 (~11%; in the wake of 1997 East Asian financial crisis), and the second highest peak ~1987 (~7%).

The data from tradingeconomics.com match those from World Bank in relevant years (but the latter gives the actual figure for each year whereas the former, in the MAX scale, makes one estimate the (ratio) value.
(iii) What is most surprising about China's economy is that all predictions about it turned out to be wrong. An Apr 21, 2012 print report (as opposed to an online blog) demonstrates, with a graph comparing four IMF forecast (all announced in April, but in different years -- 2008, 2009, 2011 and 2012) and the real numbers of those years, "pessimistic" (rather than wild-eyed enthusiastic)  IMF was "out of line" with reality.
https://www.economist.com/node/21553041
("Even the International Monetary Fund (IMF), which has been consistently more pessimistic than most economists (see chart), has slashed its forecasts for the surplus")