China's 1Q26 current account surplus declined, but the balance of payments structure still supports the RMB

Overview

This report interprets China's preliminary 1Q26 balance of payments data. The core conclusion is that the current account surplus declined from 4Q25 but remained solid, the capital and financial account deficit narrowed, and reserve assets increased. Goldman expects the goods trade surplus to ease slightly in 2026, the services trade deficit to narrow, and the current account surplus as a share of GDP to decline modestly, but an improvement in the broad balance of payments should support the RMB.

Core views

First, the 1Q26 current account surplus fell from USD 244bn in 4Q25 to USD 184bn, with the GDP ratio dropping from 4.5% to 3.8%; on a seasonally adjusted basis, it also eased from 4.3% to 3.9%. Second, net outflows in the capital and financial account slowed, but portfolio investment may have recorded larger net outflows than in 4Q25, with the detailed breakdown due at the end of June. Third, reserve assets increased by USD 48bn, clearly above the USD 6bn increase in 4Q25. Fourth, full-year 2026 current account surplus is expected to edge down to 3.4% of GDP, but the broad balance of payments is expected to rise to 1.8% of GDP, which Goldman believes supports the RMB.

Analysis framework

The report uses the balance of payments framework, breaking China's external accounts into the current account, the capital and financial account, and reserve assets, and combining goods trade, services trade, income transfers, direct investment, portfolio investment, and reserve valuation effects for judgment. The 2026 outlook combines forecasts for import and export volumes and prices, FDI and portfolio flow assumptions, and infers the implications of the broad balance of payments for the RMB.

Methodology notes

• Macro external balanceBalance of payments (BOP) framework

  The current account, capital and financial account, and reserve asset flows are used together to measure a country's cross-border capital and trade balance.

  The report uses this framework to explain the relationship between the decline in the 1Q26 current account surplus, the slowdown in capital outflows, and the increase in reserve assets.

• FX and external flowsBroad balance of payments (BBOP)

  A broader measure of external funding flows, including the current account, direct investment, and portfolio investment, used to gauge potential support for or pressure on the exchange rate.

  Goldman expects China's BBOP to rise to 1.8% of GDP in 2026 and uses that to support its constructive view on the RMB.

Asset mapping & comparison

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

• Renminbi (RMB)

  An improvement in the balance of payments typically supports the exchange rate.

  Strengths

  BBOP is expected to rise to 1.8% of GDP in 2026, capital outflows are slowing, and reserve assets are increasing.

  Weaknesses

  The current account surplus is expected to fall from 3.7% of GDP in 2025 to 3.4% in 2026, and portfolio investment remains a large net outflow.

  Comparison

  Compared with 2025, the current account contribution is slightly weaker in 2026, but capital flows and BBOP are expected to improve.

  Risks

  If portfolio outflows widen, the goods surplus shrinks faster than expected, or energy prices raise import costs, support for the RMB could weaken.

• China macro and external balance

  The current account and capital account jointly reflect external demand, import prices, and cross-border capital flows.

  Strengths

  The goods trade surplus remains large, the services trade deficit is expected to narrow, and net FDI outflows are expected to improve.

  Weaknesses

  The services account is still in deficit, direct investment remains negative, and the goods trade surplus as a share of GDP is expected to decline in 2026.

  Comparison

  1Q26 current account eased from 4Q25 but remains significantly above 1Q24; BBOP in 2026 is expected to be stronger than in 2025.

  Risks

  Global demand, energy prices, capital outflows, and reserve valuation swings could all change the external account path.

Key data

• 1Q26 current account surplusUSD 184bn, 3.8% of GDPDown from USD 244bn and 4.5% of GDP in 4Q25; seasonally adjusted it was 3.9% of GDP.
• 1Q26 goods trade surplusUSD 247bnExports were USD 960bn and imports were USD 712bn; the goods surplus declined quarter on quarter due to seasonality and was broadly flat year on year.
• 1Q26 services trade balance-USD 60bnThe services trade deficit widened slightly, with services exports of USD 101bn and imports of USD 161bn.
• 1Q26 capital and financial account deficit-USD 136bnThe deficit narrowed from -USD 238bn in 4Q25, indicating slower net outflows.
• 1Q26 direct investment-USD 10bnThis compared with a net inflow of USD 6bn in 4Q25 and swung to a net outflow in 1Q26.
• 1Q26 change in reserve assets+USD 48bnOfficial FX reserves increased by only USD 7bn, implying an estimated valuation impact of about -USD 41bn.
• 2026 current account forecast3.4% of GDPDown from 3.7% in 2025; the goods trade surplus is expected to be 4.8% of GDP, below 5.4% in 2025.
• 2026 broad balance of payments forecastUSD 391bn, 1.8% of GDPUp from USD 232bn and 1.2% of GDP in 2025.

Impact & implications

For macro assets, the report suggests that China's external accounts remain resilient, but the marginal support from the current account for growth and the exchange rate is weakening; at the same time, slower capital outflows and an improved broad balance of payments should help ease RMB pressure. For the RMB, the key issue is not the single-quarter decline in the current account surplus itself, but whether the 2026 BBOP improves as forecast and whether portfolio outflows remain below 2025 levels.

Risks

• Portfolio outflows may exceed Goldman Sachs' expectations, reducing the magnitude of the BBOP improvement.
• If the goods trade surplus narrows faster due to higher import prices or slower exports, the current account surplus may come in below forecast.
• Rising energy prices would lift import costs and compress the goods trade surplus.
• Reserve asset changes include valuation effects, so a quarterly increase in reserves does not necessarily reflect actual capital inflows.
• The detailed portfolio investment and other investment breakdown has not yet been released, so the current assessment still carries data incompleteness risk.

What to watch

• The detailed portfolio investment and other investment breakdown due at the end of June.
• Whether 2026 export volume growth approaches Goldman Sachs' revised forecast of 7.2%.
• Import volume growth and the effect of energy prices on import values.
• Whether FDI inflows and outflows remain broadly in line with 2025 patterns.
• Whether the RMB moves in line with the expected improvement in the broad balance of payments.