Balance of payments deficit, also known as balance of payments deficit, means that a country's balance of payments expenditure exceeds income. The balance of payments deficit will reduce the foreign exchange supply in the domestic foreign exchange market (China's foreign exchange supply) and increase the demand (China's foreign exchange demand), which will lead to an increase in the foreign exchange rate and a decrease in the local currency exchange rate. If the government intervenes by selling foreign exchange and buying local currency, the government's foreign exchange reserves will be insufficient and the local currency will further depreciate. Government intervention will directly lead to the reduction of domestic money supply, and then lead to the increase of domestic interest rates, leading to economic decline and unemployment.

What are the methods of balance of payments adjustment?

1. The country needs to take corresponding measures politically and economically to stimulate exports and reduce the deficit by reducing taxes and fees, encouraging exports and developing tourism.

2. The country needs to further adjust the exchange rate according to the current national conditions. The large balance of payments surplus is to adjust the local currency exchange rate, increase the local currency exchange rate, stimulate imports and reduce exports.

3. Adjust interest rates. Adjusting the interest rate can affect the outflow and inflow of capital, balance the balance of payments or narrow the deficit.

4. Introduce various loans. The government can introduce government credit or other loans to adjust the balance of payments.

5. Managing foreign exchange, the government directly intervenes in foreign exchange-related affairs and takes measures such as adjusting exchange rate to balance international payments.