Recent data on China’s external accounts presents a conundrum: while the country’s trade surplus has broken records, surpassing the US$1 trillion benchmark in the first 11 months of the year, growth in its official foreign exchange reserves has lagged. This seeming paradox prompts a question – where did the money go?
Analysts said the gap reflects how much of the surplus has flowed back overseas through asset investment, largely made by private-sector players, leaving China’s external accounts…