BOCIC(SH:601696) Bank of China Securities·2025-07-01 06:37Economic Overview - In Q1 2025, China's current account surplus increased by 250% year-on-year to $165.4 billion, marking a historical high[3] - The current account surplus accounted for 3.7% of GDP, up 2.6 percentage points year-on-year, remaining within the internationally recognized reasonable range of ±4%[3] Trade Performance - The goods trade surplus grew by 90% year-on-year to $237.5 billion, the second highest on record, only below the previous quarter's surplus of $249.8 billion[4] - Goods exports increased by 6% year-on-year to $853.7 billion, setting a new historical high, while imports decreased by 7% to $580.7 billion, the lowest since 2021[4] Capital Account Dynamics - The capital account deficit (including net errors and omissions) expanded for the fourth consecutive quarter, reaching $196.6 billion, the fourth highest on record[11] - The online capital account deficit was $171.8 billion, the second highest ever, significantly larger than the $19.7 billion deficit from the previous year[11] Foreign Investment Trends - Foreign direct investment (FDI) saw a net inflow of $200 million, down from $505 million year-on-year, indicating a slowdown in foreign debt investment[21] - The net inflow of foreign equity investment rose to $253 million, the highest since Q2 2023, driven by a recovery in stock investments[21] Foreign Exchange Reserves - China's foreign exchange reserves increased by $38.3 billion to $3.24 trillion in Q1 2025, despite a decrease in reserve assets due to short-term capital outflows[27] - The valuation effect contributed positively to the reserves, with an estimated impact of $71 billion from currency and asset price changes[27] Private Sector Positioning - By the end of March 2025, China's private sector transitioned from a net liability position to a net asset position of $78.5 billion, the first such shift since 2004[32] - The private sector's foreign assets increased by $40.3 billion, while liabilities rose by $16.4 billion, reflecting a significant change in investment behavior[33]