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    Progress in China's external rebalancing is no longer dependent on export-driven growth

    2019-07-22 | Pageviews: CHANGZHOU FOAN M AND E CORPORATION
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    WASHINGTON, July 17 (Reporter Gao Pan Xiong Maoling) International Monetary Fund (IMF) said on July 17 that in 2018, China's external position basically conformed to the medium-term economic fundamentals, and China's external rebalancing continued to make progress.

    According to the IMF's External Risk Report of 2019, China's current account surplus has dropped sharply from about 10% of GDP in 2007 to 0.4% in 2018. China's external position has basically met the medium-term economic fundamentals, indicating that China's economic growth is no longer driven by exports but driven by domestic demand.

    The report says that China's current account surplus has been declining sharply since 2007, which is the result of weak demand in major developed economies, technological upgrading of China's manufacturing industry, appreciation of the real effective exchange rate of the RMB, and expansion of the service trade deficit, reflecting remarkable progress in China's economic rebalancing.

    As China's economic rebalancing continues, the IMF expects China's current account surplus to decline further in the coming years. The IMF said that the real effective exchange rate of the RMB in 2018 was consistent with the economic fundamentals, and that cross-border capital flows were small net inflows throughout the year.

    Gita Gopinat, chief economist of the IMF, said at a news conference the same day that the IMF expects China to continue to rely on domestic consumption to drive economic growth, reduce credit dependence and encourage the private sector to participate more in the economy. She called on economies with current account surpluses and deficits to work together to address global imbalances, revitalize international trade and avoid distorting trade policy measures.

    The IMF report released on the same day also showed that the global current account balance as a share of global GDP has dropped from about 6% in 2007 to about 3% in 2018. The current account surplus is too large mainly in the euro zone economies and Asian economies such as South Korea and Singapore. The current account deficit is too large mainly in the United States, Britain, Argentina and India. Dunesia et al.

    Since 2012, the IMF has issued an annual External Risk Report, which analyses and evaluates the external imbalances and exchange rates of 29 major global economies such as the United States, China, Germany, Japan and the euro area as a whole.

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