New Delhi, June 23 (IANS) China has manipulated its trade data to show that its current account surplus as a share of GDP is smaller that of Europe and managed to get this data accepted by the IMF, according to a report published by Council on Foreign Relations (CFR).
“There is a particular chart that appears in most OECD and IMF publications on imbalances that paints a deceptive picture of the state of today’s world. It shows that Europe’s current account surplus was bigger, as a share of its GDP, than China’s surplus — back in 2024,” the report states.
The report highlights that incomplete data has been used to compile this result, which ignores that China’s reported current account surplus rose from $400 billion to around $750 billion since the end of 2024. Net exports added over a point and a half to China’s growth since then, and the euro area’s surplus is down from 420 billion euros to 280 billion euros. And in one prominent sector, autos, China’s surplus is much higher. Its exports have increased by 3 million since then while its auto imports are down by a quarter of a million.
The report further points out that these figures do not make any adjustment the euro area’s surplus for Ireland, a country that runs a massive but enormously inflated goods and services surplus due to profit shifting by mostly American multinational companies such as Apple, Microsoft and Google.
When is Ireland is netted out, China’s goods and services balance is two times bigger than the euro area’s surplus — and it has risen a lot over the last five years, the report points out.
“It takes the Chinese current account surplus and its bizarre reported deficit in investment income (China is the world’s second largest investor, after Germany, yet it loses $125 billion on net on interest and dividends while Germany gets over $150 billion) at face value,” the report points out.
It highlights that China changed its balance of payments data in a way that both eliminated errors and omissions from the financial account and reduced its reported balance of payments goods surplus back in 2022 (it now enters the data for 2021 as well). Moreover, the statistical adjustment clearly reduced the reported current account surplus significantly at a time when the underlying customs surplus was shooting up.
The need for international organisations assessing the world’s trade and savings and investment imbalances to use more than the reported current account balance in their assessment of China should now be obvious. No one believes the reported investment income deficit at this point. And frankly, it by now, should be best practice for the major international organisations to use trailing four-quarter sums (which are still lagged by quarter) rather than annual data, the report states.
When the required adjustments are made the comparison shows that Germany’s goods and services surplus is now lower than China’s goods and services surplus. All this is too important to global surveillance not to be factored into the IMF and the OECD’s work in some way, the report added.
–IANS
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