China’s unexpected surge in exports last month renewed concern from analysts at Goldman Sachs Group Inc, UBS AG and Australia & New Zealand Banking Group Ltd (ANZ) that statistics from the nation can be unreliable.
The 14.1 percent gain from a year earlier was the biggest positive surprise since March 2011, according to data compiled by Bloomberg. The increase did not match goods movements through ports and imports by trading partners according to UBS, while Goldman Sachs and Mizuho Securities Asia Ltd cited a divergence from overseas orders in a manufacturing index.
Smaller trade gains could signal a less robust recovery from a seven-quarter slowdown just as Australian Treasurer Wayne Swan says the economic rebound is a sign of improving global demand.
Photo: EPA
Accurate statistics from the world’s second-biggest economy are increasingly important for domestic and foreign investors and for China’s government, chief Greater China economist at ANZ in Hong Kong Liu Li-gang (劉利剛) said.
“China’s influence on the global economy has become bigger, so not only Chinese policy makers, but also business people and the rest of the world need better data,” Liu said. “Unreliable data could have a negative impact on resource allocation and business planning.”
The Beijing-based customs administration, which reported last month’s trade figures on Thursday, said it could not immediately respond to a faxed request from reporters for comment on the banks’ skepticism.
Chinese Vice Premier Li Keqiang (李克強), who is expected to succeed Premier Wen Jiabao (溫家寶) in March, was quoted in 2007 as saying he watched data on power, rail cargo and loans because GDP numbers were “man-made.” Li’s remarks were in a US diplomatic cable published by WikiLeaks in late 2010.
After China’s statistics bureau reported third-quarter GDP in October last year, Standard Chartered Plc analysts said the 7.4 percent increase was “too good to be true” when compared with the slowdown in electricity production and the readings of a manufacturing index, while London-based Capital Economics Ltd said its own analysis indicated expansion of about 6.5 percent.
The median forecast for last month’s exports in a Bloomberg survey of 40 economists was for a 5 percent gain, with the highest estimate at 9.2 percent, after last November’s 2.9 percent growth. Goldman Sachs, ranked by Bloomberg as the most accurate forecaster for the indicator, projected a 7 percent rise.
The increase, which was the biggest since May last year, could indicate exporters’ rush to finish year-end orders and government pressure to report exports before the end of the year to reach the government’s target of 10 percent growth for last year, Mizuho’s Hong Kong-based chief Asia economist Shen Jianguang (沈建光) said in a note on Thursday.
“It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones” or by exporting “earlier than otherwise in an attempt to improve the annual exports data,” Goldman Sachs’ Beijing-based economists Yu Song and Yin Zhang wrote the same day.
Rushed shipments and even faked exports to secure tax refunds may have contributed to the stronger growth data, according to Alistair Thornton and Ren Xianfang (任現芳), Beijing-based analysts at IHS Inc.
UBS economists led by Hong Kong-based Wang Tao (王濤) pointed to a “quite obvious discrepancy” in the growth of China’s exports to Taiwan and South Korea and those economies’ reported imports from China in recent months, even as historically they have tracked each other well.
UBS and ANZ also highlighted a surge in shipments into and out of special trade zones within China that would be classified as imports and exports.
“This anomaly has raised some suspicions as to whether some exports have been inflated to take advantage of tax rebates,” the UBS economists wrote on Thursday.
Some trading companies are turning to transportation providers like Shenzhen Global Express Logistics Ltd for help in shipping goods through so-called bonded zones to claim export tax rebates or charge higher import prices for goods without them physically leaving the country.
Shenzhen Global offers customs clearing and other freight services including a “one day tour,” Lin Yongtai, a manager with the company in the city bordering Hong Kong, said in a telephone interview.
For a fee of 1,000 yuan (US$161) per vehicle per day, the company will drive trucks into warehouses in bonded zones, where cargo must clear customs, so that businesses can obtain a refund of value-added tax on the “export” of their products or boost sale prices for goods that carry the cachet of being imported.
“A poor villager can boast he has thousands of yuan of turnover every day, but people later discover he only has one bull — he takes the bull out every morning and brings it back every evening,” Lin said. “The same applies to some parts of China’s foreign trade.”
Such practices are not unknown to the customs administration. In March 2009 it issued a statement that “some local governments and enterprises” were trying to move goods in and out of bonded zones to inflate their export and import numbers and said such shipments would not be included in official data.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”