(Photo: CGTN)

The first half of the year saw China record its first six-month current account deficit since 1998, highlighting the ongoing shift in the country’s economic model as consumption of overseas services continues to expand.

Data released Monday by the State Administration of Foreign Exchange (SAFE) showed a current account deficit from January to June of 28.3 billion US dollars, reflecting what Xinhua called a “strong domestic need for overseas services.”

The current account deficit shows that China’s spending abroad exceeded its income from overseas in the first six months, reflecting the ongoing transition from an export-based economic model to one built on domestic consumption and spending.

While China maintained a net surplus with the rest of the world on goods in the first half of the year, an increase in spending on services including outbound tourism, education, purchases of intellectual property overseas and foreign direct investment pushed the current account into negative territory for the first time in 20 years.

The first half of the year saw China maintain a 155.9 billion US dollar surplus in terms of goods traded overseas. However, the services deficit reached 147.3 billion US dollars in the first six months. The rest of the current account deficit came from negative overseas profits and current transfers, according to SAFE’s data.

Despite overall figures for the first half of 2018 resulting in a current account deficit, the second quarter data saw an overall surplus of 5.8 billion US dollars, after a rebound in exported goods.

The goods surplus in the second quarter reached 104.2 billion US dollars, a significant increase from a 51.7 billion US dollar surplus in the first three months of the year.

However, the services deficit grew slightly wider in the second quarter, increasing from 73.6 to 73.7 billion US dollars.

While the data show China’s first six-month current account deficit for two decades, the figures represent the continuation of a trend in motion since 2008 that has seen growing consumption of overseas services and increased pressure on exported goods.

In a statement posted online, SAFE said “in recent years our nation’s current-account balance has entered an equilibrium range, and either a moderate surplus or moderate deficit indicates basic balance.”