An article in the Wall Street Journal about China's balance of payments contained the following observations: "A country's balance of payments still has to add up to zero. If foreign investors wish to acquire assets denominated in yuan, the necessary implication is that China will have to run a trade deficit."
a. Do you agree that the balance of payments must add up to zero?
b. If China were to have a deficit in its balance of trade of −100 billion yuan, must it have a surplus in its financial account of 1100 billion yuan? Briefly explain.