China's Q1 current account surplus remains high, but retreats from last year's Q4

Overview

This report is Nomura's chart note on China's balance of payments, focusing on the changes in the current account, goods trade, services trade, and financial account in Q1 2026. The report points out that China's current account surplus remained above the level of a year earlier, but declined from the record high in Q4 2025; the goods trade surplus remained the main support, while the narrowing services trade deficit improved the current account structure.

Core views

The core view is that China's external surplus remains at a high level, but has edged back from the Q4 2025 peak. Nomura expects that, as export and import forecasts are raised, the 2026 trade surplus will narrow slightly, and the current account surplus as a share of GDP will also slip modestly from 3.7% in 2025 to 3.6% in 2026. On the financial account, FDI improves but net portfolio investment outflows widen, indicating that cross-border capital flows still need to be monitored.

Analysis framework

The report dissects preliminary SAFE balance of payments data by items under the current account—goods trade, services trade, primary income, and secondary income—and combines customs trade surplus, travel services deficit, FDI, ODI, and banks' customer foreign-related receipts and payments to judge the external payments position.

Methodology notes

• Macro balance of payments analysisBalance of payments decomposition

  Current account and financial account

  By looking at goods trade, services trade, and income items in the current account, as well as FDI, ODI, and portfolio investment flows in the financial account, one can assess a country's external balance strength and capital flow pressure.

• Macro ratio analysisCurrent account surplus to GDP ratio

  External surplus relative to economic size

  Comparing the current account surplus with GDP measures the external surplus's relative importance to the overall economy and helps assess whether the surplus is at a sustainable or unusually elevated level.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China macro assets

  The current account surplus remains high, indicating that the external balance still has resilience.

  Strengths

  The goods trade surplus remains the main positive contributor, while the narrowing services trade deficit improves the aggregate balance.

  Weaknesses

  The surplus as a share of GDP fell from the previous quarter, and the 2026 outlook also edges lower.

  Comparison

  Q1 surplus was above the same period in 2025, but below the record high in Q4 2025.

  Risks

  If exports slow or imports rebound faster than expected, the trade surplus could narrow further.

• Renminbi and FX market

  The current account surplus provides support through foreign exchange supply, but wider net portfolio investment outflows may offset part of that support.

  Strengths

  The high goods trade surplus and narrower services deficit are supportive of the basic balance.

  Weaknesses

  Net portfolio investment outflows widened from USD27bn a year earlier to USD53bn, showing that capital flow pressure remains.

  Comparison

  FDI improved year on year, but the portfolio investment item was weaker.

  Risks

  Capital outflows, changes in the dollar environment, or lower market risk appetite could increase exchange-rate volatility.

Key data

• Q1 2026 current account surplusUSD184bnLower than USD242bn in Q4 2025, but higher than USD164bn in Q1 2025.
• Q1 2026 current account surplus as a share of GDP3.8%Down from 4.4% in Q4 2025.
• Q1 2026 goods trade surplusUSD247bnBroadly unchanged from a year earlier; the customs-based trade surplus edged down from USD271bn to USD264bn.
• Nomura's 2026 trade surplus forecastUSD1,161bnLower than USD1,185bn in 2025.
• Nomura's 2026 current account surplus as a share of GDP forecast3.6%Slipping slightly from 3.7% in 2025.
• Q1 2026 services trade deficitUSD44bnNarrowed significantly from USD72bn in Q1 2025.
• Q1 2026 travel services deficitUSD47bnNarrowed from USD60bn in Q1 2025.
• Q1 2026 FDIUSD34bnRebounded from USD15bn a year earlier.
• Q1 2026 ODIUSD44bnBelow USD50bn a year earlier.
• Q1 2026 net portfolio investment outflowsUSD53bnHigher than USD27bn a year earlier.

Impact & implications

For macro assets, a current account surplus remaining at a high level usually helps buffer external financing pressure and support foreign exchange supply, but the decline in the surplus as a share of GDP and the widening of net portfolio investment outflows mean the external account is not improving in a one-way fashion. If the trade surplus narrows later in line with Nomura's expectations, expectations for the renminbi, interest rates, and cross-border funds may depend more on export resilience, domestic demand recovery, and capital flow changes.

Risks

• If the trade surplus narrows faster than expected, it could pull down the current account surplus as a share of GDP.
• Wider net portfolio investment outflows could weaken the support that the current account surplus provides to the FX market.
• If the services trade deficit, especially the travel services deficit, widens again, it could drag on the current account.
• The report uses preliminary SAFE data, and later revisions may change both the item-level and headline conclusions.

What to watch

• The revised Q1 2026 balance of payments data from SAFE.
• 2026 export and import growth, and changes in the customs trade surplus.
• Whether the services trade and travel services deficits continue to narrow.
• The subsequent trends in FDI, ODI, and net portfolio investment outflows.
• Whether the current account surplus as a share of GDP falls from 3.7% in 2025 to 3.6% in 2026 as expected.