China's capital, financial account posts a deficit
Updated: 2013-02-01 22:01
China's capital and financial account posted a deficit in 2012, while the current account surplus shrank during the same period, according to data released by the State Administration of Foreign Exchange on Friday.
In a statement published on its website, the foreign exchange watchdog said the country registered a $117.3 billion deficit in the capital and financial account last year, in contrast to a surplus of $186.1 billion in 2011.
The country's current account surplus fell to $213.8 billion by the end of December, accounting for 2.6 percent of GDP. The proportion went down by 0.2 percentage points compared with that of the previous year.
The increase of China's foreign exchange reserves, which are the world's largest, stood at $98.7 billion in 2012, down 74 percent year-on-year.
In the fourth quarter of 2012, the world's second-largest economy ran a $65.8 billion surplus on the current account and a $31.8 billion deficit on its capital and financial account, SAFE said.
"The deficit reflected the fact that last year China faced capital outflow pressure as global and domestic economic growth softened and international financial turbulence increased," it said.
The reform of the currency exchange rate formation mechanism also contributed to the deficit last year, said SAFE.
"As the reform deepens and foreign reserves stabilize, if the current account witnesses a surplus, a deficit will be formed on the capital and financial account," it said.
It added a slower increase of foreign reserves wouldn't affect the effectiveness of the central bank's monetary policies, as the People's Bank of China has multiple instruments to adjust liquidity when the economic situation changes.