Trade account surplus has always been the main source of China's foreign exchange reserves. Due to the combination of internal and external factors, such as slow growth of external demand, the rise of anti-globalization and asymmetric opening up, China's trade account surplus has gradually narrowed and even showed a deficit in the first quarter of this year. With the trade war becoming increasingly fierce, the situation throughout the year is not optimistic, and it is likely to remain so for some time to come. How to adapt to the new normal of trade account balance has become a very important issue in macro management.The balance of trade account is narrowing, and there may be a trend changing from positive to negative. The new normal of the trade account requires systematic planning and comprehensive consideration. In terms of specific policies, we suggest the following steps be taken: First, we should increase tax and cost reductions, support with a moderate depreciation of the RMB exchange rate, and do everything possible to stabilize exports. Second, we should implement the negative list for foreign investment access, improve the business environment, and strive to attract high-quality capital. Third, we should take the initiative to turn war into an opportunity, build a social security system, and effectively unleash domestic demand. Fourth, we will standardize cross-border capital flows, upgrade the foreign exchange regulatory system, and actively guide outbound investment. Fifth, we should uphold the multilateral trading system and promote balanced development of trade with the strategy of bilateral free trade areas.
