April 4, 2014 / 8:31 AM / in 4 years

UPDATE 1-China 2013 current account surplus to GDP ratio falls to 2 pct

* 2013 current account surplus $182.8 bln-SAFE

* 2013 capital/financial account surplus $326.2 bln

* SAFE sees possible capital outflows in 2014 (Adds details, quotes)

BEIJING, April 4 (Reuters) - China’s current account surplus was equivalent to 2 percent of gross domestic product in 2013, down from 2.6 percent in the previous year, official data showed, as the government seeks to reduce the economy’s reliance on external demand.

China had a final current account surplus of $182.8 billion in 2013, falling 15 percent from the previous year, the State Administration of Foreign Exchange, or SAFE, said in a statement on its website, ww.safe.gov.cn.

The fourth-quarter current account surplus was $44 billion.

The surplus-to-GDP ratio has comfortably fallen below the threshold that some U.S. officials have recommended as necessary to keep the global economy well balanced.

China’s current account surplus was about 6 percent of GDP in 2009 and 10.1 percent in 2007. The steady decline has been helped by the country’s solid economic growth in recent years.

China will be able to maintain a certain level of current account surplus in 2014, the foreign exchange regulator said, vowing to keep the balance of payments basically stable and prevent risks from cross-border capital flows.

China needs to improve its ability to cope with possible capital outflows this year due to emerging market volatility, it said.

“Externally, the Federal Reserve’s exit from quantitative monetary policy easing could lead to repeated market speculation. Its negative impact will gradually accumulate and more shocks in emerging markets could spread to China,” it said.

China had a surplus of $326.2 billion in its capital and financial account, including a $127 billion surplus in the fourth quarter, according to SAFE.

China’s foreign exchange reserves grew nearly $510 billion in 2013, signalling heavy intervention by the central bank to control the yuan’s rise, which was nearly 3 percent.

But the yuan has shed 2.6 percent so far this year as the central bank took advantage of the country’s weak external trade picture at the start of the year to strike at speculators betting on sustained one-way appreciation of the yuan.

Last month, the central bank doubled the yuan’s daily trading band to help introduce more two-way currency volatility.

SAFE said that it will continue to push forward yuan convertibility on the capital account while stepping up its monitoring of cross-border capital flows.

It will improve the way it manages China’s foreign exchange reserves, at a record $3.82 trillion at the end of 2013, to safeguard and increase the value of the reserves, the regulator said without elaborating. (Reporting by Xiaoyi Shao and Kevin Yao; Editing by Kim Coghill)

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