China Balance of Payment Report(First half of 2025)

In the first half of 2025, China’s international payments presented a picture of remarkable resilience and strategic rebalancing against a complex global backdrop. While international financial markets remained volatile and global growth momentum weakened, China’s external sector demonstrated underlying strength, maintaining a fundamental equilibrium in its balance of payments.

The current account remained in a comfortable surplus of USD 294.1 billion, a testament to the enduring competitiveness of the Chinese economy. The surplus was anchored by a resilient trade in goods sector, which posted a surplus of USD 456.7 billion on the back of 7% year-on-year export growth. More telling, however, was the dynamism in trade in services, which saw total volume rise by 6%. Crucially, the deficit in services trade narrowed by 13%, driven by a surge in inbound tourism revenue—up an impressive 42% year-on-year. This boom reflects the tangible impact of policy dividends, including relaxed visa policies and optimized payment facilitation for foreign visitors. Investment income flows were also on an upward trajectory, with returns on both China's outward investments and foreign investments in China rising by 13% and 7% respectively.

On the financial front, a significant and healthy dynamic unfolded. A deficit in the non-reserve financial account (USD 318.2 billion) naturally offset the current account surplus, reflecting the market-driven outward allocation of domestic savings. Outward investments by domestic entities remained active and orderly, increasing by a net USD 385.9 billion. Notably, a 60% year-on-year surge in outward portfolio investments, fueled by interest in Hong Kong stocks, highlighted the growing sophistication of Chinese investors.

More importantly, the narrative around foreign capital flows saw a marked improvement. After a period of adjustment, foreign investments in China recorded a net inflow of USD 67.7 billion, a decisive shift from the second half of 2024. Foreign direct equity investments rebounded sharply, climbing 45% from a low base in the same period last year. Sentiment in portfolio flows also turned positive: foreign holdings of domestic Chinese stocks shifted from net outflow to net inflow, while investments in RMB-denominated bonds remained broadly stable. This renewed foreign interest underscores continued confidence in China's long-term growth story and the relative appeal of its financial markets.

This two-way flow of capital—inward investment balanced by outward diversification—resulted in the steady accumulation of external assets. By the end of June 2025, China’s total external assets had surpassed USD 11 trillion for the first time, with net external assets reaching a robust USD 3.8 trillion, a 16% increase from the end of 2024. Foreign exchange reserves stood at a stable USD 3.3 trillion.

Looking Ahead

Looking forward, the external environment will undoubtedly remain challenging. Yet, China's balance of payments is well-positioned to navigate these headwinds. The internal foundation for equilibrium remains solid, supported by ongoing high-quality development, a proactive macroeconomic policy stance, and a deepening high-standard opening-up. We can expect the current account to continue operating within a reasonable and balanced range. More importantly, the recent positive trends in cross-border two-way investment and financing are likely to see steady improvement. With its vast market, complete supply chains, and improving financial market connectivity, China is poised to remain a key engine for global trade and a premier destination for international capital seeking both growth and diversification.