Question 24.

In 2012, a highly significant change in the "Other Investment" account of the Financial Account of China was observed before 2007, China's foreign exchange regime required firms and households to convert all income from current account transactions into Chinese Yuan (renminbi) immediately. This "surrender requirement" has been gradually loosened since then, giving firms and households more flexibility to hold FX deposits abroad In addition, Chinese residents, firms, and banks had the incentive to immediately convert their FX income into Yuan to benefit from the expected appreciation of the Yuan. In 2012, the expectations reversed and motivated holding foreign currency deposits by residents and firms and lending cross-border by banks. Other Investment went from a small net surplus (inflow) balance in 2011 to a large net deficit (outflow) balance in 2012 representing a shift of foreign exchange activity away from China's central bank.

P.R. of China's Balance of Payments for 2011 is provided in the picture below.

Now, help complete China's Balance of Payments for 2012 by answering the following questions. Assume in 2012 China's deposit and loan outflows increased by $270B and its trade (goods) surplus increased by

$80In addition, assume the Official Reserves Account changed, but no other balances (except the totals) changed as compared to 2011.

a.What is China's 2012 Balance of Trade (Current Account-Goods)? Express your answer in billionsof US dollars and indicate a debit using "-".

b.What is China's 2012 Financial Account-Other Investment balance? Express your answer in billionsof US dollars and indicate a debit using "-".

c.What is China's 2012 Official Reserves Balance? Express your answer in billions of US dollars andindicate a debit using "-".

i.a: 324