The gap between China’s reported exports to Hong Kong and the territory’s imports from the mainland widened last month to the most this year, suggesting fake export-invoicing is again skewing China’s trade data.
China recorded US$1.56 of exports to Hong Kong last month for every US$1 in imports Hong Kong registered, leading to a US$13.5 billion difference, according to government data compiled by Bloomberg.
Hong Kong’s imports from China climbed 5.5 percent from a year earlier to US$24.1 billion, figures showed yesterday; China’s exports to Hong Kong surged 34 percent to US$37.6 billion, according to mainland data released on Oct. 13.
While China’s government has strict rules on importing capital, those seeking to exploit yuan appreciation can evade the limit by disguising money inflows as payment for goods exported to foreign countries or territories, especially Hong Kong.
The latest trade mismatch coincided with renewed appreciation of the yuan, leading analysts at banks and brokerages including Everbright Securities Co (光大證券) and Australia & New Zealand Banking Group Ltd to question the export surge.
“This is definitely another important piece of evidence of over-invoicing exports to Hong Kong to facilitate money inflow into China,” Mizuho Securities Asia Ltd chief Asia economist Shen Jianguang (沈建光) said. “So we shouldn’t be too optimistic about recent export data from China.”
Doubts over the data raise broader concerns, as a surge in exports was believed to have underpinned economic growth in the third quarter. Shen said the economic outlook is “challenging” and more easing is “necessary.”
Data released yesterday added to evidence of moderating economic growth. Industrial profits rose 0.4 percent last month from a year earlier, following a 0.6 percent decline in August — the weakest two months since mid-2012.
Gross domestic product rose 7.3 percent from July to last month annually, the slowest expansion since the first quarter of 2009. Export demand has been a bright spot in an economy depressed by a property slump and a decline in investment growth.
Although a rapid increase in luxury goods shipments suggests some of the exports to Hong Kong should be attributed to capital inflows, exports of processed goods including the iPhone drove the surge last month, Nomura Holdings Inc China economist Hua Changchun (花長春) said.
Companies have “faked, forged and illegally re-used” documents for exports and imports, State Administration of Foreign Exchange’s inspection department deputy head Wu Ruilin (武瑞林) said at a briefing in Beijing last month. The country has uncovered almost US$10 billion in fraudulent trades nationwide since April last year.
China’s government noticed the rapid increase in trade of some merchandise with Hong Kong in September, Shen Danyang (沈丹陽), spokesman of the Ministry of Commerce, said at a briefing on Oct. 16. The spokesman said the ministry would step up scrutiny and analysis.
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