China's current-account surplus rose to US$306bn in 2010, but as a proportion of GDP it has been falling since 2008 and stood at 5.2% in 2010. The surplus is forecast to continue to shrink relative to GDP in the forecast period, and we expect it to fall to the equivalent of 2% of GDP by 2015. Although merchandise exports are forecast to expand by 12.5% a year on average in the forecast period, this will be well below the supercharged pace of export growth recorded in the period preceding the 2008-09 global financial and economic crisis. A large proportion of China's imports consists of components that are assembled in the country before being shipped abroad again, and its imports and exports therefore tend to expand at similar rates. However, a growing proportion of imports will be consumed domestically in 2011-15, and, at an average of 15.2% a year, import growth will outpace export expansion. The trade surplus will therefore fall, but at US$150.2bn in 2015 it will remain substantial.

The services deficit will widen considerably in 2011-15, largely reflecting a surge in overseas travel by Chinese tourists. In addition, the economy's growing sophistication will see demand for imports of professional services increase rapidly, although exports of services will also grow, reflecting the rising earnings of Chinese companies working on infrastructure projects overseas. The income account will post a huge surplus in the forecast period as a result of the income earned on China's enormous stock of foreign-exchange reserves, which will continue to rise. These inflows will dwarf the income debits associated with the country's large stock of inward foreign direct investment. However, such outflows will grow as the number of foreign firms operating in China expands rapidly and their revenue rises strongly. The current transfers account will remain in surplus in 2011-15, reflecting the high level of remittances from overseas Chinese.