Why is it said that the US has a current account deficit? Yes, the trade balance is negative but the capital infusion by the developing economies into the US market should amount for much more than the negative trade balance. Isn't it so? Can someone explain this?

Question

anonymous · Answer

Because by definition, the Current Account of the Balance of Payments does NOT include any Capital flows.  So the fact that our Current Account deficit is being financed by China and other countries that are willing to take our government bonds is not a factor in this.   wmw

hassanrizwan · Answer

Alright I understand it now. Thanks