China said its capital-account deficit last quarter was 42 percent narrower than initially estimated, signaling outflows of funds were less severe than the previous figures suggested.
The State Administration of Foreign Exchange today revised its estimate of the capital-account gap to $41.2 billion, compared with the initial $71.4 billion published July 31. The agency said the current-account surplus was $53.7 billion, down from the previous figure of $59.7 billion. SAFE didn’t give an explanation for the revisions.
Slower capital outflows would mean less downward pressure on the yuan and growth at risk of decelerating for a seventh quarter. Chinese Premier Wen Jiabao signaled yesterday that there’s more room for fiscal and monetary policy to support expansion, saying the nation has full confidence it will meet its economic goals for the year.
“Outflow risks for China, without any external or domestic shock, are limited,” said Ding Shuang, a Hong Kong-based senior China economist with Citigroup Inc. “China’s economic fundamentals remain there, and yuan appreciation pressure will return in a long-term point of view.”
SAFE, in its 44-page balance-of-payments report, said the yuan exchange rate has reached a reasonable level and that there is no “massive” short-selling pressure on the currency.
China will maintain a “relatively big” trade surplus in the second half of this year and the country is able to “withstand impacts from cross-border capital flows,” SAFE said, citing rapid economic growth, the surplus and large foreign- exchange reserves.
The yuan strengthened 0.1 percent to 6.3275 against the U.S. dollar as of 11:20 a.m. in Shanghai. The currency has dropped about 0.5 percent this year.
China reported a $14.9 billion capital-account surplus for the first half. The current-account surplus was $77.2 billion, or 2.1 percent of gross domestic product, SAFE said.
--Zhou Xin. Editors: Scott Lanman, Paul Panckhurst
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