According to the fundamentals of Balance of Payments (BOP), the sum of its sub accounts must always add up to zero. Usually for most economies, a deficit in the current account is offset by a surplus in the financial/capital account, or vice versa. However, China has been running a huge surplus in both of its current account and financial/capital account in the last 15 years.


How is this possible? Does that mean the BOP is in surplus for China? Explain in detail.

Answer rating: 100% (QA)

Yes it is possible for China to have a surplus in ... View the full answer