These summary notes provide background documentation for the 2016 Article IV consultation with China. Many are based on longer research papers that are expected to be published over the next few months.
Prepared by Geoff Gottlieb (SPR).
In this note, the focus is on capital outflows recorded in the capital account and errors and omissions. There has been some discussion of whether there is also capital flight in the current account, notably with reference to tourism. However, this is difficult to verify due to important changes in SAFE's statistical methodology in 2014-15.
When analyzing private capital flows, the line item "Other Investment: Other Receivables" is excluded as it relates to changes in Other Foreign Assets on the balance sheet of the PBC and tends to be policy driven. This line item included an US$ 87bn inflow in Q3:2015.
Note that such discrepancies between customs trade data and SAFE's foreign exchange data do not imply per se that the current account surplus is overstated. Rather, they point to outflows conducted by exporters and importers that are already captured in the capital account and errors and omissions.