China's external surplus has returned to the center of global policy debates, and a new Federal Reserve FEDS Note argues that recent revisions to China's balance of payments (BOP) data make the true size of that surplus harder to assess. The note, published September 22, 2026, documents that with the release of 2025 fourth-quarter BOP data, Chinese authorities made historically large revisions to export and import data going back to 2019. On net, the revisions slightly increased the overall current account balance in recent quarters, but the more consequential change was compositional: BOP exports moved much closer to customs exports, largely eliminating the previous gap between the two measures, while the discrepancy between BOP and customs imports increased substantially.
The mechanics trace back to a 2021 methodological change intended to align China's external accounts with the IMF's Balance of Payments Manual, Sixth Edition (BPM6). Under the revised approach, trade flows are recorded on an ownership basis rather than on the physical movement of goods across borders. For example, an iPhone produced under contract for Apple and sold in China is recorded as a net BOP import even though it never crossed an international border. Prior to 2021, the customs and BOP trade balances tracked each other relatively closely. By the end of 2025, the gap between the customs and BOP trade surplus stood at roughly $120 billion, equivalent to about 0.6 percent of China's GDP. The recent revisions raised each series by about $60 billion on average, with considerably larger adjustments in recent quarters: exports were revised up by nearly $120 billion and imports by about $80 billion.
The note's central concern is that the remaining gap is now concentrated almost entirely on the import side, where ownership-based adjustments are particularly difficult to independently verify. The import discrepancy accounts for 96.6 percent of the remaining gap, while the export gap accounts for only 3.4 percent. Validating these adjustments requires information on the value of foreign-owned goods produced in China that are sold domestically—information not available from customs or partner-country trade data. The note highlights that contract manufacturing firms reportedly account for about 70 percent of China's trade, with the remainder estimated through other channels. This concentration makes the remaining discrepancy especially difficult for outside observers to assess.
The implications are material for exchange rate and global imbalance analysis. Using China's customs trade statistics as a benchmark for the goods trade component of the BOP data, the authors find that China's current account surplus would be roughly 0.6 percent of GDP larger than reported in official statistics, bringing the surplus to roughly 4.4 percent of GDP. Applying the IMF's External Balance Assessment framework to this adjusted current account estimate implies that the renminbi is undervalued by approximately 24 percent relative to its medium-term fundamentals, as opposed to 20 percent when using official BOP current account data. The note frames this as evidence that accurately measuring China's current account surplus is important for assessing the scale of global imbalances, evaluating exchange rate misalignment, and informing international policy discussions.
The analysis is bounded by a single source read in full, and the authors do not claim to resolve the underlying data reliability questions. The note explicitly frames the import-side concentration as a verification problem rather than a confirmed misstatement. What to watch next is whether Chinese authorities provide additional detail on ownership-based import adjustments, whether partner-country trade data can be used to cross-check the revised figures, and whether future BOP releases continue to show a widening gap between customs and BOP import measures. The note's broader message is that continued examination of China's external statistics remains essential for policymakers assessing global imbalances.