Overtakes the trust SBI

Ifo - China overtakes Germany in current account surplus

According to calculations by the Munich researchers, the People's Republic has a surplus of the equivalent of 310 billion dollars, according to the research published on Friday by Reuters. Germany follows in second place with 261 billion. In both countries, these sums come about primarily because they sold far more goods abroad than they received from there. With a distance of third place follows another export nation with Japan with 158 billion dollars.

The change at the top is mainly due to the fact that Germany, unlike China, sold significantly fewer goods abroad with important trading partners due to the recession. "The traditionally high surplus in the German trade in goods turned out to be 34 billion dollars less than in 2019," said study author Christian Grimme to Reuters. China, on the other hand, was able to increase its exports despite the global corona recession. The reason: The export world champion produces goods that are particularly in demand during the pandemic. "On the one hand, more electronic equipment such as data processing equipment was purchased from China," said Grimme. This is probably a consequence of the increased work from home, which necessitates additional investments in IT products such as laptops and monitors. In addition, the global demand for medical protective equipment has increased considerably. China's mouth and nose mask exports have been boosted.

The global criticism of Germany at the still very high surplus - despite the decline - is unlikely to cease. In terms of economic output, it fell in 2020 to 6.9 percent from 7.1 percent in 2019 and thus for the fifth time in a row since its peak of 8.6 percent in 2015. "That is still a very, very high figure - especially in comparison with other large export nations," said Grimme. "The European Union, however, considers a maximum of six percent to be sustainable in the long term." A value that has been consistently exceeded since 2011. The EU Commission, like the International Monetary Fund, refers to the deficits that are faced by such large surpluses and warns of the high debts of the countries concerned. In China the surplus only accounts for 2.1 percent of economic output, in Japan 3.2 percent.


According to the Ifo Institute, the world's largest current account deficit is traditionally attributable to the USA, because again there were far fewer goods exported than imported and the Americans also earned significantly less from investments in securities abroad. It should add up to 635 billion dollars, which corresponds to 3.1 percent of economic output. "The US deficit hasn't been that high since 2008," said Grimme. And that, although the recently replaced US President Donald Trump tried to change that with punitive tariffs and an aggressive "America First" policy. He saw his country being exploited by trading partners such as Germany and threatened punitive tariffs on cars - the German export hit par excellence. The United States is followed by Great Britain with a deficit of 91 billion dollars (3.6 percent) and France with 64 billion (2.9 percent).

The current account is not only influenced by the trade in goods, but also, for example, by payments from investments such as interest and dividends as well as the trade in services. With the latter, there was a novelty in Germany in 2020 because of the Corona crisis: the traditional deficit in services melted the Ifo calculations by 22 billion dollars and was almost balanced. "Since the statistics began in 1971, the German service deficit has never been so small," said Grimme. The cause of this is again to be found in the pandemic: According to Grimme 2020, the Germans took a lot less vacation abroad due to the corona. As a result, significantly less money flowed into countries such as Italy, Spain or Greece, which caused the deficit in the trade in services to collapse. This ensured that, despite the significant decline in exports, there was still a very high surplus in the current account.

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