China has reportedly manipulated its balance of payments and trade data to make its current account surplus appear smaller than Europe's as a share of GDP — and succeeded in getting this distorted picture accepted by the International Monetary Fund (IMF) and the OECD, according to a report published by the Council on Foreign Relations (CFR).

The Deceptive Chart at the Centre of the Controversy

The CFR report flags a specific chart that appears in most OECD and IMF publications on global imbalances. The chart purports to show that Europe's current account surplus was larger, as a share of its GDP, than China's surplus — as recently as 2024. According to the report, this picture is fundamentally misleading.

In reality, China's reported current account surplus climbed from $400 billion to around $750 billion since the end of 2024. Net exports added over 1.5 percentage points to China's growth over the same period. Meanwhile, the euro area's surplus has contracted — from 420 billion euros to 280 billion euros.

The Ireland Distortion and What It Hides

The CFR report also points out that the standard comparisons make no adjustment for Ireland, which runs an artificially inflated goods and services surplus driven by profit-shifting by predominantly American multinational corporations, including Apple, Microsoft, and Google. When Ireland is excluded from the euro area calculation, China's goods and services balance is reportedly two times larger than the euro area's surplus — and has risen sharply over the past five years.

The auto sector illustrates the divergence starkly. China's auto exports have risen by 3 million units since 2024, while its auto imports have fallen by around 250,000 units.

Suspicious Investment Income Data

The report draws particular attention to what it calls a 'bizarre' deficit in China's reported investment income figures. China is the world's second-largest net creditor — after Germany — yet its official data shows a net loss of $125 billion on interest and dividends. Germany, by contrast, earns over $150 billion net on its foreign investments. The CFR report states that 'no one believes the reported investment income deficit at this point.'

How China Altered Its Balance of Payments Data

According to the report, China revised its balance of payments data in a way that, back in 2022, simultaneously eliminated errors and omissions from the financial account and reduced its reported goods surplus — with the revised figures applied retroactively to 2021 data as well. The statistical adjustment significantly reduced the reported current account surplus at a time when the underlying customs surplus was rising sharply, the report notes.

What International Bodies Should Do Next

The CFR report argues that it should now be considered best practice for major international organisations to use trailing four-quarter sums rather than annual data, and to go beyond the reported current account balance when assessing China's trade position. When the required adjustments are applied, Germany's goods and services surplus is shown to be lower than China's — a reversal of the picture currently presented in official publications.

The report concludes that the issue is 'too important to global surveillance' not to be factored into the IMF and OECD's analytical frameworks going forward.