The major importance of the changes in China’s balance of payments structure for the global economy

China still has a significant trade surplus, but has since 2014 suffered from large capital outflows , which were smaller in 2017, but larger again in 2018. The result was a sharp fall in China’s foreign exchange reserves from 2014 to the end of 2016, followed by relative ly stable foreign exchange reserves . Before 2014, capital flowed into China, and its foreign exchange reserves increased sharply as a result . What are the consequences of this change in China’s balance of payments structure? Increased fragility for the renminbi’s exchange rate; Until 2013, the capital outflows were organised by the central bank, since 2014 they have been carried out by other economic agents: this has led to a shift from purchases of mainly public sector bonds, for the most part in dollars, to purchases of asset s represent ing corporate capital (equities, direct investments , etc. ); This development has been particularly detrimental for the United States: China’s external surplus with the United States has increased, but the People's Bank of China no longer automatically finances the US external deficit. This deficit is financed only if economic agents other than China choose to invest in the United States, which is not automatic.