Balance of Payments from a Comparative Perspective: China, India, and Russia under Globalization
Balance of Payments from a Comparative Perspective: China, India, and Russia under Globalization

Author(s): Akira Uegaki
Subject(s): National Economy, Supranational / Global Economy
Published by: Hokkaido Slavic-Eurasian Reserarch Center
Summary/Abstract: The three regional powers of China, India, and Russia have been actively participating in international trade and international financing recently, although they have large populations, huge territories, and abundant natural resources, which would enable them to be independent and autarkic. The globalization movement especially since the ’90s has undoubtedly made their attitudes possible, but on the other hand, the fact that the three regional powers have sailed out on the world market itself has made today’s globalizing trend as a whole stronger and faster. The purpose of this paper is to clarify each country’s similarities and peculiarities in their international financing in a globalizing economic situation by using balance of payments statistics. China, India, and Russia have a common feature in their macroeconomic structure in the new century, that is, the excess of savings over investment, which resulted in current account surpluses. At the same time, the three countries have actively introduced foreign financial resources through various routes. Consequently, their financial claims against the rest of the world have been increasing rapidly, especially in the form of reserve assets of the central banks. These phenomena reflect weak financial networks in their domestic markets, which would have functioned as financial intermediaries and added to domestic investment. Of course there are different characteristics among the three countries. India seems to be a typical developing industrial state, because of its relatively small current account surplus (sometimes, deficit), and active introduction of many kinds of foreign financial resources, which have spurred domestic economic development. On the other hand, Russia is unique because both the I-S balance and fiscal balance have been in large surplus, which resulted in a large amount of reserve assets. At same time, it is noteworthy that its foreign economic transactions have been isolated from domestic economic circulation. China’s international finances, especially in the sphere of FDI, have close connection with its domestic economy. The net receipt of investment income is also an important point in China’s future.

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