The Reason For China Current Account Deficit: Tourism

Sep. 07, 2019 4:02 AM ETiShares China Large-Cap ETF (FXI)
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Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a competitor of Dow Chemical. Today, he works as a regulatory compliance consultant at J&J, but his real passion will stay in macro-economics. His experience in the chemical and pharmaceutical industry allows him to monitor the economy from a process engineering standpoint, analyzing macro-economic charts, correlations and trends.

Summary

  • China current account goes back in surplus.
  • China services deficit is declining, probably due to lower tourism spending.
  • China goods trade surplus is stable.

China's current account deficit is attributed to tourism. It's not like China isn't producing goods anymore, it's just that China is now consuming its money and they go all over the world to spend their money, creating a services deficit.

But this services trade deficit is narrowing and the current account surplus is rising again.

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