Estimation of the Current Account Imbalance of China based on Macroeconomic Balance and External Sustainability by IMF

Since 2003,the global imbalance increased significantly in the form of current account imbalance and reached the peak before the U.S.sub-prime mortgage crisis before 2007.As early as 2006,China has become the largest surplus country with over 24% of current account surplus.This paper introduces three approaches of IMF to estimate the equilibrium current accounts("current account norms") of China.We find that the reference value of current account is around 3.12% of GDP.China's real exchange rate adjustment has lagged behind the actual real rate since 2004.To accelerate the reform of RMB exchange rate formation mechanism is one of the effective ways to manage the external imbalance.