China shifts to capital deficit in Q2

BEIJING -- China's capital and financial account shifted to a deficit of $71.4 billion in the second quarter this year from a surplus of $56.1 billion in the first quarter, foreign exchange regulators said Tuesday.

The capital and financial account deficit was $20.3 billion in the first half, the State Administration of Foreign Exchange said.

"The country has suffered a certain degree of capital outflow in the first half, but this does not suggest a massive retreat of foreign investment," it said in a statement on its website.

The country's current account surplus widened to $59.7 billion in the second quarter from $23.5 billion in the first quarter, it said.

The current account surplus in the first half of the year was $83.2 billion, down 5 percent from one year earlier. The surplus was equivalent to 2.3 percent of the country's GDP in the first half, down from 2.8 percent in the same period of 2011, offering new evidence that the world's second-largest economy is relying less on external demand.

However, the statement said China's trade surplus might continue to widen in the second half, as continuously falling commodity prices on the global market will help cut import costs.

The country's trade surplus hit $68.91 billion in the first six months, compared with $44.93 billion a year ago, according to customs statistics.