Central Bank of China
PRESS RELEASE Release Date: August 20, 2004



BALANCE OF PAYMENTS
For the second quarter of 2004, the current account registered a surplus of US$5.14 billion, net outflow in the financial account amounted to US$0.86 billion, and the Bank’s international reserves increased by US$3.05 billion.

In terms of the current account, both exports and imports hit the highest figures on record. Exports grew by 28.9% year on year mainly due to global economic rebound. Imports grew by 38.5% as a result of rising import demand for raw materials and capital equipments coupled with mounting prices of raw materials. As imports increased by a larger amount than exports, surplus of goods trade shrank to US$4.57 billion, a decline of 19.5% or US$1.1 billion over the same quarter last year. Services account deficit grew by 8.3% compared to the same quarter last year, and reached US$0.79 billion, mainly as a result of the increase in freight payments and travel payments. Income surplus dropped by 7% year on year to US$2.23 billion mainly due to the increase in the outward remittances of direct investment income by non-residents and in interest payments on foreign loans. Current transfers registered a deficit of US$0.87 billion. In total, the decrease in the surplus of goods trade and income, combined with the increase in deficit of services and current transfers made current account surplus drop to US$5.14 billion, a decrease of US$1.56 billion or 23.3% over the corresponding quarter last year.

In the financial account, direct investment and portfolio investment exhibited a net outflow of US$1.09 billion and US$7.77 billion, respectively. These were mainly attributable to net outflows generated by residents’ investments abroad. Despite the US$2.49 billion of offshore corporate bonds and depositary receipts issued by domestic enterprises, the outflow of equity securities investment by non-residents turned portfolio investment by non-residents from a net inflow of US$5.49 billion during the same period last year to a net outflow of US$1.18 billion during this quarter. Other investment posted a net inflow of US$8 billion, mainly because the banking sector increased its borrowing from abroad to extend foreign currency loans to local clients.

For the first half of this year, the current account surplus accumulated to US$11 billion, the financial account posted a net inflow of US$14.86 billion, and the Bank’s reserves assets increased by US$24.15 billion.

Notes: 1.The upcoming balance of payments data will be released at 16:20 on November 19, 2004.

2. For the release schedule for the next six months, check the CBC website at http://www.cbc.gov.tw/EngHome/ESDDS/calacal.asp



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