| Summary: |
Since the onset of the global crisis, China and the U.S. current-account imbalances are now less than half their pre-crisis levels. For China, the reduction in its current-account surplus post-crisis suggests a structural change. Panel regressions almost 100 countries over 1983-2013 confirm that the relationship between current-account balances and economic variables changed in important ways after the financial crisis. For China, the reduction in its current-account surplus post-crisis suggests a structural change. The rebalancing of China’s current account has been also associated with a decline in its reserves-to-GDP ratio and greater outward FDI that, in turn, mitigates reserve hoarding.
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