China’s trade figures raise questions

DOUBTS REMAIN::Analysts said the trade data did not match the much lower figures reported by the country’s trade partners and might have been manipulated or inflated


Thu, Apr 11, 2013 - Page 15

China’s trade expanded last month in a possible positive sign for its recovery, but analysts said the data might be inflated and give a distorted picture of the economy’s health.

Imports rose 14.1 percent after growing 5 percent rate for the combined January-February period, customs data showed yesterday, suggesting that Chinese manufacturers and consumers might be buying more.

March exports rose to US$182.2 billion while imports were US$183.1 billion, leaving a rare monthly deficit of US$900 million, according to China’s General Administration of Customs.

Export growth slowed to 10 percent from the previous two-month period’s 23.6 percent. That could add to challenges for the newly installed Chinese Communist Party (CCP) leaders as they try to sustain the rebound from China’s deepest downturn since the 2008 global crisis and avoid job losses.

However, analysts said that the data might have been distorted by companies misreporting trade or government manipulation, clouding the picture of whether an economic recovery is gaining traction.

Exports probably are even lower than reported, based on what is known about shipments into Hong Kong, GE Oriental Financial Group chief economist Francis Lun (藺常念) said.

Hong Kong is Chinese territory and handles a big share of the country’s trade, but is treated as a separate customs region.

“The figures in Hong Kong to and from China do not add up,” he said. “Instead of 10 percent growth, you have 2 percent or 3 percent.”

China’s economic growth rose to 7.9 percent in the three months ending in December, up from the previous quarter’s 7.4 percent. Analysts say the recovery from the country’s deepest downturn since the 2008 global crisis is being propped up by government spending and could be vulnerable if trade or state-driven investment weakens.

Commentators raised questions after China’s strong trade data failed to match up with much lower figures reported by its trading partners.

Some suggested that companies might be reporting phony exports to get tax rebates or to evade Beijing’s strict capital controls and move money into China with fictitious billing of foreign customers. Others say Beijing might have exaggerated trade volume to make the economy look healthier during the transition to new CCP leaders in recent months.

“Today’s trade data release has not instilled any more confidence in either the quality of data or the strength of the recovery,” IHS Global Insight analyst Alistair Thornton said in a report.

Referring to February’s explosive reported export growth, Alaistair Chan of Moody’s Analytics said in a report: “It now seems that it was probably due to some issue with the reporting of exports, or possibly over-invoicing as firms evaded capital controls to bring in more foreign capital.”

Chinese customs officials defended their data yesterday at a news conference.

“Every dollar that is listed in the customs trade data can be traced back to an actual declaration form,” said Zheng Yuesheng (鄭躍聲), a spokesman for the bureau. “The exported or imported goods listed on the declaration form have to be something shipped across the border, either in or out.”

Beijing’s capital controls and tax breaks, and other privileges for foreign investors, give Chinese companies an incentive to covertly bring in money from abroad. Economists believe a large share of China’s reported foreign investment is money sent abroad by Chinese companies and “round-tripped” back into the country.