In recent years China has experienced two forms of extreme macroeconomic imbalance: an expenditure imbalance in the sense of very high investment and very low consumption, giving rise to rapid capital accumulation; and an imbalance between expenditure and production, producing external imbalance, i.e. a huge surplus on the current account of the balance of payments. This paper explores the current state of the external imbalance in China, and reviews the factors underlying the pre-2008 rising and the post-2008 drop in China’s current account surplus. The paper says that China’s current account surplus must be modest in recent years. However, despite the fact that China’s recent current account is likely to stay below its precrisis range, it is too early to conclude that “rebalancing” has been truly achieved in China. Certainly, the policy thrust of the 12th Five Year Plan is very much focused on raising household income, boosting consumption, and facilitating an expansion of the service sector. In the coming years, if these ongoing structural reforms are implemented, China does have the potential to hand-off from an investment-driven to a consumption-driven decline in its external imbalance.

• 박재진(동서대학교 국제학부)