Former SAFE economist uses basic BoP method for China financial account, Brad Setser notes

Former SAFE economist uses basic BoP method for China financial account, Brad Setser notes
China reserves analysis methods debated

Brad Setser questions the decision of SAFE's former chief economist to use the most basic balance of payments (BoP) accounting split—specifically FDI, portfolio, other investments, and reserves—to analyze China's financial account.

Setser expresses surprise at relying on such a simplified structure for understanding the complexities of China's reserve management.

Setser has previously observed that China needs large-scale exports to balance its increased supply, raising concerns about potential trade imbalances in recent analysis. He has also examined the country’s reliance on net exports for growth, questioning traditional views of global trade in earlier commentary. These points contribute to ongoing scrutiny of China’s external accounts.

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