Thu, Feb 13, 2014 - Page 15 News List

Trade data contradict China slowdown

DISTORTION:False invoices and the timing of the Lunar New Year holiday may have skewed the General Administration of Customs’ report of a 0.1 percent gain

Bloomberg

China’s export and import growth unexpectedly accelerated last month, defying signs the world’s second-largest economy will slow while fueling speculation that fake shipments are resurfacing.

Overseas shipments rose 10.6 percent from a year earlier, the Chinese General Administration of Customs said yesterday in Beijing, a pace that may be distorted by false invoices and holidays and compares with economists’ median projection of for a 0.1 percent gain.

Imports advanced 10 percent, leaving a trade surplus of US$31.9 billion, the widest for January since 2009.

The trade report added to skepticism over the quality of China’s economic data after a crackdown by authorities last year on the use of inflated export invoices to disguise capital inflows. Asian stocks extended gains and the Australian dollar jumped as the report provided some evidence of support for an economy that is projected by analysts to grow at its slowest pace in 24 years this year.

“This should make markets more relaxed about both global demand and demand in China’s own economy,” Louis Kuijs, chief China economist at Royal Bank of Scotland Group PLC in Hong Kong, said in a note yesterday. “However, we are also left with a nagging feeling that perhaps issues such as over-invoicing have risen sharply in intensity early this year.”

China’s exporters have been challenged by a yuan that has appreciated about 2.8 percent against the US dollar in the past 12 months, the most among 24 emerging-market currencies tracked by Bloomberg.

The comparison with year-earlier figures is distorted because of false invoices to disguise capital flows last year and the different timing of the week-long Lunar New Year holiday. A widening discrepancy between Hong Kong and Chinese data for bilateral trade in December spurred speculation that China’s numbers are again exaggerated because of fake exports.

This year’s new year holiday began on Jan. 31, while last year’s started on Feb. 9. Yesterday’s data may reflect shipment arrangements that were advanced by exporters ahead of the festival and this month’s figures “may slow down a bit,” Bank of Communications Co (交通銀行) analyst Liu Xuezhi said in Shanghai.

Economists’ estimates for exports ranged from a decline of 8 percent to a 5.9 percent gain, following December’s 4.3 percent advance. Imports were projected to rise 4 percent from a year earlier, after December’s 8.3 percent increase, and the trade surplus was forecast at US$23.45 billion, based on median projections in Bloomberg surveys.

China’s exports to Hong Kong in December exceeded the city’s reported imports from the mainland by about 70 percent, the biggest difference since April. The Chinese State Administration of Foreign Exchange said in December that it would boost scrutiny of trade financing and that banks should prevent companies from getting financing based on fabricated trade.

Shipments from China to Hong Kong decreased 18.3 percent last month from a year earlier to US$26.3 billion, contrasting with a 10.7 gain in exports to the US, and an 18.8 percent jump in goods bound for the EU, according to yesterday’s customs figures.

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