China hits first balance of payments deficit after 14 years

The deficit of US$11.8b is also the first time international reserves have fallen on a quarterly basis.

According to Nomura, China‟s balance of payments (BOP) fell to a quarterly deficit of US$11.8bn in Q2, close to our forecast of US$13bn. This is the first BOP deficit in China since 1998 – and the first time international reserves have fallen on a quarterly basis, excluding valuation effects from exchange rates and asset prices.

Here's more from Nomura:

China‟s current account surplus rose to US$59.7b in Q2 from US$23.5bn in Q1, but it was offset by a record-high US$ 71.5bn deficit of the capital and financial accounts at (including errors and omissions). Net foreign direct investment (FDI) inflows fell to US$38.6bn from US$48.9bn in Q1, while other items in the capital and financial accounts saw a record-high net outflow of US$110bn collectively, in Q2.