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China had a $372 billion overall current account surplus in 2007. Assuming that Chinas net debt forgiveness was zero in 2007 (its capital account balance was zero), what can you specifically conclude about the relationship of Chinese purchases of financial and real assets abroad versus foreign purchases of Chinese financial and real assets? Explain.
Inorder to counterbalance its current a/c surplus China will have to obtain a deficiet in its capital a/c.Given thatcapital a/c balance=is 0,this could be possible only if its purchase of foreign financial& real assets exceeds foreign purchases of Chinese



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