In recent years, China's balance of payments has remained fundamentally balanced, with both the current account surplus and the non-reserve financial account deficit increasing simultaneously. This reflects deeper integration with the global economy and a more open approach to engaging with the world. The accumulated current account surplus has been allocated through outward investments by enterprises and banks to various regions and industries globally. This has enhanced the international operations of domestic entities and diversified their asset allocations, while also supporting the industrial development and financial stability of trade and investment partners, achieving mutual benefit and win-win outcomes.
The current account balance has grown steadily, with the surplus generally maintained within a reasonable range. The current account reflects a country's industrial competitiveness and medium-to-long-term structural economic characteristics. Over the past five years (2021-2025), China's current account transactions averaged 7.8 trillion U.S. dollars annually, a 42% increase compared to the previous five years (2016-2020). The average annual current account surplus was 431.2 billion U.S. dollars, accounting for 2.3% of GDP. Firstly, the resilience of goods trade has strengthened. Over the past five years, the total annual value of goods imports and exports under the balance of payments framework increased by 47% compared to the previous five-year period. China's comprehensive industrial system continuously adapts to overseas demand, with the manufacturing sector's value-added accounting for a leading share of GDP globally. Deep integration of technological and industrial innovation enables China to keep pace with changes in international market demand, providing high-quality supply and supporting global supply chain stability. Secondly, trade in services has shown steady improvement. In 2025, the total value of services trade exceeded 1 trillion U.S. dollars, a 44% increase from 2021, becoming a new engine for foreign trade development. The services trade deficit exceeded 230 billion U.S. dollars, making China the largest deficit country in services trade. Demand for services imports spans various fields, including travel (tourism and study abroad), intellectual property, finance, and business services, with imports primarily concentrated in developed economies such as Europe and the United States, providing stable market demand for service enterprises in these countries.
The capital inflows generated from the current account are transformed into outward investments under the financial account, maintaining the fundamental balance of China's balance of payments. Over the past five years, the average annual deficit in China's non-reserve financial account was 374.2 billion U.S. dollars, roughly equivalent to the current account surplus. On one hand, outward investment has grown rapidly. Over the past five years, various outward investments by domestic entities averaged 503.7 billion U.S. dollars annually, an 11% increase compared to the previous five-year period. By the end of 2025, China's outward asset stock reached 11.8 trillion U.S. dollars, a 33% increase from five years prior. Among these, outward direct investment stock stood at 3.6 trillion U.S. dollars, spanning 190 countries and regions across various industries and sectors, promoting local employment growth and industrial development. Outward portfolio investment and other outward investments amounted to 2.0 trillion U.S. dollars and 2.4 trillion U.S. dollars, respectively, distributed across approximately 120 countries and regions, providing funding and liquidity support to the financial markets of these economies. Overall, China's outward investments have achieved mutual benefit and shared development gains. On the other hand, foreign investment into China has remained stable. By the end of 2025, China's external liability stock was 7.7 trillion U.S. dollars, a 17% increase from five years prior. Structurally, inward direct investment stock accounted for 4.0 trillion U.S. dollars, representing 52% of China's total external liabilities. China has consistently been a key destination for multinational corporations' global investment strategies, with a high proportion of absorbed foreign direct investment. The return on foreign direct investment in China has consistently ranked among the highest in major economies, with China's robust economic growth and vast domestic market providing substantial investment returns for foreign capital. Inward portfolio investment stock reached 2.4 trillion U.S. dollars, a 20% increase from five years prior, with its share of external liabilities rising to 30%. China's efforts to expand financial market openness, broaden foreign investment channels, and optimize services for foreign investors have strengthened their willingness to hold renminbi-denominated assets.
In summary, the characteristics of China's balance of payments changes in recent years reflect positive outcomes from the country's high-quality economic development and expanded opening-up. Looking ahead, there are favorable conditions for maintaining a fundamentally balanced balance of payments. Firstly, China will coordinate efforts to stabilize exports and expand imports. With strong competitiveness in foreign trade, optimized trade structures, and the vigorous development of new trade formats, exports are expected to remain resilient. As the world's second-largest consumer market, China will continue to leverage its advantages as a super-large market to import more high-quality international goods, better integrate import expansion with export stabilization, and promote balanced and optimized trade development. Secondly, domestic enterprises will continue to pursue diversified global layouts, innovate in cooperation areas, models, and formats, and engage in diversified asset allocations, ensuring steady and orderly development of outward investments. Thirdly, by developing new quality productive forces tailored to local conditions, continuously expanding high-level opening-up, and actively enhancing regional economic and trade cooperation, China will continue to attract foreign investment and the allocation of renminbi-denominated assets.
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