China continues to see capital account deficit

China continues to see capital account deficit

China's capital and financial account remained in deficit in the third quarter as a result of the global financial crisis and a domestic economic slowdown, the country's foreign exchange regulator said.

The capital and financial account deficit shrank to $71 billion from $71.4 billion in the second quarter, the State Administration of Foreign Exchange (SAFE) said in an online statement.
It said the surplus was mainly a result of global financial headwinds and the domestic slowdown and does not suggest "capital flight", reported Xinhua.

The surplus showed that foreign exchange assets are gradually shifting from the central bank to institutions and individuals, SAFE said.

China's current account surplus reached $70.6 billion during the July-September period, the regulator said.

In the first nine months, the current account surplus came in at $147.8 billion, accounting for 2.6 percent of China's GDP during the period, down 0.3 percentage points year on year, the regulator said.

Excluding the effect of changes in exchange rates and asset prices, the country's international reserve assets shed $400 million in the third quarter.

Foreign exchange reserves increased by $300 million during the period, with reserves in the International Monetary Fund (IMF) and special drawing right (SDR) both decreasing by $800 million.