China | A reversion of Balance of Payments: from pandemic to post-pandemic era

We summarize China’s Balance of Payments situation in 2023 post-pandemic time and compare it with the pandemic time; we also predict its trend in 2024.

Key points

• Key points:
• As Chinese authorities lifted Covid-19 lockdown, the Balance of Payments situation has reversed significantly in 2023 compared with pandemic time.
• The reversion is not only displayed in current account such as negative growth of exports, but also in capital account, namely the dipping portfolio inflows and FDI etc.
• It is important to understand what was going on in the past year’s BoP reversion and to predict this year’s BoP items in 2024.
• Based on our above analysis of the BOP components in 2024, we are able to do a quantitative exercise of forecasting the change of foreign reserves in 2024.
• Our model yields a projected decrease of USD 99.16 billion in foreign reserves by the end of 2024, implying that foreign reserves at end-2024 will decline to USD 3,140.84 billion, compared with USD 3,240 billion at end-2023.

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