What does balance of payments surplus mean?

The balance of payments surplus means that a country's currency income is greater than its currency expenditure, which is manifested as an increase in international reserves or an increase in net external claims. In the balance of payments, it includes the current account, capital account and financial account. A surplus usually means that a country's economy is stronger and can attract more capital inflows.

The following are some of the main reasons for the balance of payments surplus:

1. Increased exports: A country’s exports are greater than its imports, which means that the country’s goods and services are in the international market be competitive. Increased exports will lead to an increase in foreign exchange reserves, resulting in a balance of payments surplus.

2. Foreign capital inflow: When foreign direct investment (FDI) or portfolio investment flows into a country, it will also lead to a balance of payments surplus. The funds may be used to invest in building factories, purchasing assets or other business activities, thus increasing the country's foreign exchange reserves.

3. Tourism revenue: If a country has rich tourism resources and attracts a large number of foreign tourists, then tourism revenue will also lead to a surplus in the international balance of payments. Tourists consume local goods and services during their travels, thereby increasing the country's foreign exchange earnings.

4. International aid: Some countries may accept aid or loans from international organizations, which will also lead to a balance of payments surplus. These funds are usually used to invest in infrastructure construction, education, medical and other fields, helping to improve the country's economic development level.

However, a balance of payments surplus is not always a good thing. Excessive surpluses may lead to currency appreciation, thereby affecting export competitiveness. In addition, large amounts of foreign exchange reserves may also become political and economic targets for other countries, which poses certain risks. Therefore, many countries will adopt policy measures, such as horizontal target range management, exchange rate adjustments, etc., to maintain a basic balance of international payments.