China’s foreign exchange office has confirmed that the country posted a slight overall current account deficit for the first half of 2018, the first time China has recorded a half-year deficit in twenty years, Caixin reports.
The country’s current account balance—which takes into account the balance in trade of goods and services as well as foreign payments—for the first six months of the year stood at a deficit of $28.3 billion, according to the State Administration of Foreign Exchange (SAFE).
China continues to have a strong trade surplus in goods, posting a trade surplus of $155.9 billion in the first half. But this has been offset by the steep rise in its deficit in services, fueled by a massive rise in outbound tourism.
According to Zhang Ming, chief economist at Ping An Securities, the current account deficit can be attributed to a number of factors, namely the pressure being applied to China’s goods trade (in part due to the trade tensions with the United States), the continued expansion of services trade, and ultimately the fact that the savings rate is falling, which is possibly linked to the country’s aging population.