In international economic intercourse,
the residents of the country engage in a
variety of transactions with residents of
other countries. These transactions
such as exports and imports of goods,
services rendered, are interrelated in
many ways, and together they comprise
the international payments of a country.
international economic intercourses: （国际经济交流）
Balance of Payments Statements are compiled
on a double-entry system of accounting. All
receipts (increases in liabilities or decreases in
assets) are recorded as credit items (plus
items), while all payments (increases in assets
or decreases in liabilities) are recorded as
debit items (minus items).
double-entry system of accounting: 复式会计制度
Assets/ liabilities ：资产/负债
credit / debit：贷/借（会计术语）
I:The Structure of Balance of Payments
The current account includes four sub-
accounts: goods; services; income and
Balance of Payments Statements:国际收支平衡表
income：收入 unilateral Transfers：单方面转移
Services include all receipts and payments
between the residents and foreigners on
transportation, insurance, travel,
Income includes Compensation of Employees
and Investment Income.
Unilateral transfers are transactions that
are only one-sided since there is no
Private transfers consist of institutional
expenditures for missionary, charitable,
educational and others of like purposes.
Government transfers include pension, tax
receipt from non-residents, non-military
grants and others.
The capital account records the
changes in a country's international
financial assets and liabilities, but
excluding changes in official reserves,
over the balance of payments period.
It usually consists of two sub-accounts:
Capital Transfers: Investment Grants and
Debt Cancellation Acquisition of
Non-product, Non-financial Assets
acqussition/disposal of non-product, nonfinancial assets
Financial Account records the changes of
investment between residents and non-
residents, including Direct Investment,
Portfolio Investment, Other Investment
4.Net errors and Omissions
In fact, two offsetting entries may not be
made explicitly and simultaneously for
each transaction; instead, different items
are rerecorded separately on the basis of
statistical or aggregate data drawn from a
variety of sources.
net errors and omissions：净差错与遗漏
Because some of these sources are
incomplete or inaccurate, the item is
needed to bring the total debits and
credits into an arithmetic equilibrium.
5.Reserves and Related Items①.
They comprise: foreign exchange in
convertible currencies ②; reserve position
in the International Monetary Fund ③;
allocation of Special Drawing Rights ④;
Gold Stock ⑤.
Function of Balance of Payments
A country's balance of payments is very
important to investors, business managers,
consumers and government officials because
it influences, and is influenced by, other key
macroeconomic variables such as GNP,
employment, price levels, exchage rates and