China Current Account Tops $4.6T, Up 16% in H1

China’s current account receipts and payments totaled US$4.6 trillion in the first half of 2026, up 16 percent year-on-year, the State Administration of Foreign Exchange (SAFE) said, as the country’s cross-border trade and investment flows proved resilient against a volatile global backdrop.

The current account surplus reached US$378 billion over the period, holding stable relative to gross domestic product, according to the Xinhua News Agency. The 16 percent growth in total transactions was 13 percentage points higher than the equivalent figure for 2025, marking a sharp acceleration.

Context

The figures come from SAFE’s China Balance of Payments Report for the First Half of 2026, released September 29 alongside the finalized balance of payments (BOP) table for the second quarter and first half. Because China runs a structural trade surplus, its BOP has since 2022 shown a pattern SAFE calls “autonomous balance”: a current account surplus paired with a capital and financial account deficit. Under this framework, surplus funds are redeployed abroad by banks and enterprises rather than signaling capital flight.

The data landed on China’s National Day and were framed against a difficult external environment - geopolitical conflict, elevated global inflation, tightening monetary policy in advanced economies, and greater financial market volatility.

Key Developments

Merchandise trade led the expansion. On a BOP basis, goods imports and exports rose 18 percent year-on-year, with artificial intelligence and green-energy-related trade performing notably well. Goods imports climbed nearly 20 percent - 2.3 percentage points faster than exports - leaving a goods trade surplus of US$526.3 billion for the half.

Services trade was more mixed but improving. Services exports grew 21 percent, while imports rose 7 percent. China remains a major global services importer, posting a services deficit of US$115 billion. SAFE attributed 16 percent of services export growth to rising numbers of foreign visitors to China and 42 percent to fast-growing emerging producer services.

The investment picture strengthened markedly. Total incoming foreign investment recorded a net increase of US$192 billion in the first half, up from US$68.2 billion a year earlier, according to the Shanghai Securities News. That figure covered direct investment, portfolio investment, and other flows such as deposits and loans. Foreign net purchases of Chinese A-shares reached US$53.7 billion, while foreign bond investment swung from net reduction in the first quarter to net increase in the second.

A SAFE special column highlighted the fast-growing panda bond market: 42 issuers floated 89 tranches in the first half, raising RMB 160 billion, up 69 percent year-on-year and equal to 87 percent of the full-year 2025 total. For the first time, foreign issuers accounted for 54 percent of fundraising - surpassing Chinese-background issuers.

Analysis

SAFE officials stressed that the companion capital and financial account deficit of US$345.2 billion does not indicate outflow pressure. “A rising current account surplus correspondingly raises the capital and financial account deficit - this does not mean increased cross-border outflow pressure,” Deputy Director and spokesperson Li Bin said at a July 17 press conference, as recorded in the SAFE transcript. He described the gap as the mirror image of Chinese entities deploying surplus funds into global markets.

According to the official BOP table, external assets stood at US$12.2 trillion at end-June, up 3.3 percent from end-2025, while external liabilities rose 8.3 percent to US$8.4 trillion - leaving net external assets of US$3.8 trillion.

SAFE framed the structural shift in investment as a sign of deepening integration. “Foreign investment in China has shifted from valuing ‘Made in China’ cost and scale advantages toward jointly participating in ‘Created in China,’” spokesperson Zhao Yuchao said. The report credited technological innovation with driving both the scale and the structural improvement of the current account.

What’s Next

SAFE expects the current account to keep growing, with exports and imports developing in a coordinated way, and two-way cross-border investment to remain active. The agency also signaled a new package of cross-border investment and financing facilitation measures, including simplified capital account settlement, expanded cross-border financing for technology and green entities, a national green foreign-debt pilot, and continued QDII quota issuance.

Key questions remain over how persistently high energy prices and geopolitical tensions will weigh on trade flows in the second half, and whether the rebound in foreign portfolio investment - particularly in bonds - will hold as global monetary conditions evolve.