What Is a Balance of Payment Deficit?

Balance of payments refers to all currency balances caused by a country's foreign economic transactions and settlement of foreign claims and debts within a certain period of time. It has two levels of meaning, narrow and broad. The narrow balance of payments refers to the foreign exchange income and expenditure that must be settled immediately in a country or region due to various foreign economic exchanges such as economy and culture within a certain period of time. In a broad sense, the balance of payments refers to the sum of the monetary values of all economic activities occurring between residents and non-residents in a country or region. It is a microcosm of a country's foreign political and economic relations, and it is also a reflection of a country's position in the world economy and its rise and fall. The balance of payments situation is usually reflected by the balance of payments statement, which is a statistical table that systematically records the country's balance of payments items and finances within a certain period of time. This statistical table is a comprehensive overview of the country's foreign economic transactions The basic information is the main basis for the government to formulate foreign economic policies, and it is also the economic environment that international marketers must consider when making marketing decisions. ^[1]

Balance of payments

Balance of payments refers to all currency balances caused by a country's foreign economic transactions and settlement of foreign claims and debts within a certain period of time. It has two levels of meaning, narrow and broad. The narrow balance of payments refers to the foreign exchange income and expenditure that must be settled immediately in a country or region due to various foreign economic exchanges such as economy and culture within a certain period of time. In a broad sense, the balance of payments refers to the sum of the monetary values of all economic activities occurring between residents and non-residents in a country or region. It is a microcosm of a country's foreign political and economic relations, and it is also a reflection of a country's position in the world economy and its rise and fall. The balance of payments situation is usually reflected by the balance of payments statement, which is a statistical table that systematically records the country's balance of payments items and finances within a certain period of time. This statistical table is a comprehensive overview of the country's foreign economic transactions The basic information is the main basis for the government to formulate foreign economic policies, and it is also the economic environment that international marketers must consider when making marketing decisions. ^[1]

International balance of payment

In principle,

It mainly focuses on the determinants of a country's balance of payments and appropriate policies to maintain a balance of payments.

1. Elasticity, also known as elasticity analysis, is represented by British economists

(I) The birth of the concept of balance of payments

The balance of payments is caused by a country's foreign economic, political, and cultural exchanges.

Governments can choose

Continuous, large-scale

Relationship between China's balance of payments and floating RMB exchange rate

The fluctuation of the RMB exchange rate is mainly related to China's balance of payments. Because the RMB exchange rate does not target a single currency, it is floating against the US dollar, it is floating against the Euro, and it is also floating against the Japanese yen. Therefore, if some other major currencies are not Stability, whether it is an upward or downward trend, from this perspective, it is more necessary for the RMB floating mechanism to be more flexible so that it can respond to changes in other currencies. Global economic imbalances, including the so-called imbalances, inconsistencies, and unsustainability of the Chinese economy itself, and the correction process will not be a short period of time. It seems that there can be a very clear boundary. It's over, I'm afraid it's not that simple. Of course, the most important thing is to look at the changes in this trend by analyzing the changes in the supply and demand relationship in the foreign exchange market.

And in order to prevent the appreciation of the yuan, the central bank will take further market intervention measures. In this process, the central bank is also a participant in the foreign exchange market, taking certain interventions in the supply and demand of the market according to certain rules. In general, the closer the RMB exchange rate is to the equilibrium point, the greater the role of market supply and demand, that is to say, to allow and encourage market supply and demand to play a greater role. The degree will be weakened in an orderly manner, which can better reflect a managed floating exchange rate system based on market supply and demand.