A single policy often cannot solve the problem, so it is often used in combination with multiple policies.
Balance of payments, also known as external balance, means that the difference between a country's net balance of payments, that is, net exports and net capital outflows, is zero. Namely: net balance of payments = net export-net capital outflow; Or BP = NX-f.
measure the transaction payment of one country to all other countries within a specific time period. If the inflow of money is greater than the outflow, the balance of payments is positive. Such transactions arise from current account, financial account or capital account. The balance of payments is regarded as another economic indicator of a country's relative value, including trade balance, overseas investment and foreign investment.
Extended information:
Excessive trade surplus is a dangerous thing, which means that the growth of domestic economy is too dependent on foreign countries. The huge trade surplus has also brought about the expansion of foreign exchange reserves, which has brought greater appreciation pressure to the currency.
when a country has a large trade deficit, it means that its foreign exchange reserves are reduced, the international competitiveness of its commodities is weakened, and its foreign trade is at a disadvantage during this period. A large trade deficit will aggravate the outflow of domestic resources and increase foreign debts, which will affect the normal and effective operation of the national economy.