Chinese exports to Hong Kong rose 10.8 percent from a year earlier for the biggest gain in more than a year, making the territory the biggest destination for shipments last month and spurring renewed skepticism over data reliability and the broader recovery in China’s outbound trade.
Exports to Hong Kong rose to US$46 billion last month, according to data released by China’s General Administration of Customs yesterday. That was the highest value in almost three years and the biggest amount for any December in the past 10 years, customs data showed. Imports from Hong Kong surged 65 percent, the most in three years, to US$2.16 billion.
Economists said the surprise gains might harken back to past instances of phony invoicing and other rules skirted to escape currency restrictions. Beijing said in 2013 that some data on trade with Hong Kong were inflated by arbitrage transactions intended to avoid rules, an acknowledgment that export and import figures were overstated.
The increase in exports to Hong Kong and China’s imports from the territory probably indicate “fake invoicing,” said Iris Pang, a senior economist for Greater China at Natixis SA in Hong Kong. Invoicing of China trade should have been larger last month because of the wider gap between the onshore yuan and the offshore yuan traded in Hong Kong, she said.
China’s exports to the Special Administrative Region of more than 7 million people eclipsed the US$35 billion tallies last month for both the US and the EU, the data showed. Exports to Brazil, Canada, Malaysia and Russia all dropped more than 10 percent.
The imports gain “points to potential renewed fake trade activities,” said Larry Hu (胡偉俊), head of China Economics at Macquarie Securities Ltd in Hong Kong.
When the yuan rose in 2013, exports to Hong Kong were inflated artificially, he said, and “now it’s just the opposite.”
China’s total exports rose 2.3 percent in yuan terms from a year earlier, the administration said, after a 3.7 percent drop in November. Imports extended declines to 14 months.
The recovery in exports last month might prove to be a temporary one due to a seasonal increase at the end of the year, and it does not represent a trend, a customs spokesman said after yesterday’s briefing. A weak yuan is expected to help exports, but that effect would gradually fade, the spokesman told reporters in Beijing.
Morgan Stanley economists, led by Zhang Yin (張胤) in Hong Kong, also said in a note yesterday that the higher-than-expected trade growth might have been affected by currency arbitrage. Overall external demand remained weak, as shown by anemic export data reported by Taiwan and South Korea, he said.
Because enforcement efforts on irregular capital outflows have been stepped up recently and the spread between the onshore and offshore yuan has narrowed, “the potential distortion will likely dissipate in the coming months,” the analyst said.
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