The balance of payments refers to all monetary receipts and payments caused by a country's foreign economic exchanges and the settlement of foreign claims and debts in a certain period of time. It has a narrow sense and a broad sense.
In a narrow sense, the balance of payments refers to the foreign exchange receipts and payments that must be settled immediately due to various foreign economic exchanges such as economy and culture in a certain period of time. The generalized balance of payments refers to the sum of the monetary value of all economic activities between residents and non-residents of a country or region.
It is a microcosm of a country's foreign political and economic relations, and it is also a reflection of a country's position and rise and fall in the world economy.
The balance of payments is usually reflected by the balance of payments table, which is a statistical table that systematically records the balance of payments items and finance of a country in a certain period of time. This statistical table is the basic information for countries to fully grasp their foreign economic exchanges, the main basis for the government to formulate foreign economic policies, and the economic environment that international marketers must consider when making marketing decisions.
The impact of the huge balance of payments deficit: making the country's external liabilities exceed its ability to pay, triggering a debt crisis; Depleting the country's foreign exchange reserves, weakening the country's financial strength, depressing the local currency exchange rate, and damaging the country's international reputation; Because the export income is mainly used to repay the principal and interest, it is impossible to import the means of production necessary for the economic development of the country, which affects the national economy.
The impact of a large surplus in the balance of payments: a large number of exports mean predatory exploitation of domestic economic resources; The central bank needs to spend a lot of local currency to buy foreign exchange, and the supply of base money increases. Increase the pressure of inflation; Long-term surplus with major trading partners is prone to trade friction.