Net lending (net financial investment) by the private, government and foreign sectors, which must sum to zero by identity — one sector's financial surplus is necessarily another's deficit. This is Wynne Godley's sectoral balances framework applied to China: before 2008 the story was the enormous external surplus; since 2020 it is a private-sector surplus swollen to 7-9% of GDP (excess household saving plus corporate deleveraging), mirrored by an ever-wider government deficit. Where Godley famously flagged the U.S. private sector's persistent deficits as unsustainable, China's warning sign points the opposite way: excess private surplus and deficient demand.
This graph shows the net lending positions of China's three sectors — "net financial investment" in the flow-of-funds accounts (non-financial transactions): each sector's gross saving less capital formation, adjusted for capital transfers. Private = households + nonfinancial enterprises + financial institutions; government is the general government; the foreign sector's net lending equals the current-account balance with the sign flipped (negative when China runs a surplus, i.e. the rest of the world borrows from China). After the statistical discrepancy, the three balances sum to zero by identity.
Structural turning points worth reading off the chart: 2005-2008, the foreign sector plunged deeply negative (the current-account surplus approached 10% of GDP) while both private and government sectors exported saving; 2009-2015, the external surplus narrowed after the RMB-4-trillion stimulus and the corporate sector releveraged aggressively (deeply negative nonfinancial-enterprise net lending); 2020 to date, household net lending jumped to 13-15% of GDP (precautionary saving plus the property deleveraging squeeze on housing outlays), lifting the private surplus to 7-9% of GDP — mirrored by a general-government deficit widening to 6-7% of GDP. In Godley's framework this is the accounting picture of a private sector unwilling to spend and a government passively absorbing the surplus — the macro backdrop to every demand-stimulus debate.
Annual data from 1992, published with a one-to-two-year lag and revised after economic censuses. Toggle the statistical discrepancy with the checkbox.