The Chinese Current Account Imbalances: Puzzles, Patterns, and Possible Causes

China's large current account surplus has been an irritant to its trading partners. While industrial and trade policies often lead to sector-level imbalances, they play a relatively limited role in the economy-wide surplus. Structural factors such as an unbalanced sex ratio and uneven access to financing by state-owned and non-state firms are more important determinants of the current account imbalance. While macroeconomic stimulus can boost imports and reduce the surplus in the short run, any long-term solution would need to involve reforms aiming at addressing the structural problems.