After a trade surplus of over one trillion US dollars: China's capital outflow pattern gradually takes shape.

As China's manufacturing competitive advantages continue to expand, especially in areas such as semiconductor equipment, AI supply chains, high-end equipment, and new energy, the country has maintained the world's largest trade surplus for many consecutive years. Last year, the trade surplus broke through the trillion-dollar mark. This also pushed China's current account surplus to a historical peak of approximately $735 billion last year.

However, this massive current account surplus is no longer reflected in the passive accumulation of official foreign exchange reserves, but is instead converted into overseas asset allocation through channels such as the accumulation of net external assets by commercial banks, securities investment by households through compliant channels, and enterprises expanding outward direct investment.

In 2025, China's non-reserve financial account deficit was about $782 billion, with securities investment outflows surging from $179 billion the previous year to $426 billion. Correspondingly, as of May 2026, the cumulative net settlement of foreign exchange by banks for clients reached as high as $263.1 billion, yet the RMB exchange rate did not come under one-way appreciation pressure—funds are flowing out again through more diversified channels, such as Bond Connect Southbound, the expansion of QDII, and multinational company cash pools.

In addition, domestic real estate adjustments have led to a decline in traditional financing demand, the recovery of household consumption remains relatively slow, corporate capital spending has become more cautious, and the financial system continues to maintain a high savings rate. Since mid-2025, as the RMB strengthens and exporters concentrate their foreign exchange settlements, interbank market liquidity has become highly ample. The massive trade surplus continues to flow back into the domestic market, exacerbating the asset shortage and pushing long-term interest rates and credit spreads to historical lows.

The continuous decline in financing costs has, on one hand, driven a structural shift from bank-dominated indirect financing to direct financing. In 2025, direct financing (bonds and equity) accounted for 47% of new social financing, surpassing bank loans (45%) for the first time. On the other hand, low-interest RMB has further acquired attributes of a carry trade and funding currency. More and more emerging market companies, multinational corporations, and international financial institutions have begun to actively issue RMB bonds and use RMB loans to replace dollar financing. This also provides a structural window for domestic funds to go overseas, while giving the central bank stronger pricing influence in the offshore market.

As the balance of payments structure shifts from the traditional twin surplus model to a mirror-image pattern of "massive current account surplus + non-reserve financial account deficit," China is substantively transforming into a structural capital exporter. The internationalization of the RMB has also moved from being driven by trade settlement to a new phase driven by capital exports and investment and financing.

Capital Exports Are Reshaping the Logic of RMB Internationalization