China Tells

(WSJ) China’s current account surplus in the first half of this year sank 32% from a year earlier, the first decline since 2004, preliminary data from the country’s foreign-exchange regulator showed Thursday.

The surplus in the current account, a measure of trade in goods and services, was $130 billion in the January-June period, narrowing from $191.72 billion in the same period of 2008, according to the State Administration of Foreign Exchange.

SAFE said in a statement on its Web site it will issue the final balance of payments report for the first half around September-October. It didn’t elaborate on the figures Thursday.

The last time China’s current account surplus fell during the first six months of the year was in 2004, when it shrank to $7.47 billion from $11.12 billion a year earlier.

Thursday’s data show the impact the global financial crisis has had on the world’s third-largest economy, as China’s net direct investment fell by half and the trade surplus narrowed.

For the first half, China posted a $118.33 billion surplus on the trade of goods, and a $18.64 billion deficit on the trade in services, SAFE said.

China is on track to post the first decline in its trade surplus, the main driver of the current account, since 2003. For the January-July period, China’s trade surplus was $107.5 billion, compared with $295.5 billion for all of 2008, according to China customs’ figures.

The capital and financial account surplus shrank to $33.14 billion in the first half, less than half the year-earlier figure of $71.93 billion, SAFE said.

The decline came mostly as net direct investment fell 50% to $20.57 billion in the first six months, from $40.75 billion in the same period of 2008.

In the first half, assets held in reserve fell to $185.94 billion, from $280.78 billion a year earlier.

Errors and omissions, or cross-border capital flows that authorities can’t accurately account, recorded an inflow of $22.81 billion in the first half, up from $17.13 billion in the same period of 2008.