Analysts Sceptical of China Export Data Surge

An unexpected surge in China's export data has triggered skepticism from analysts at several banks.


Bloomberg reports that analysts at Goldman Sachs Group Inc., UBS AG and Australia & New Zealand Banking Group Ltd. (ANZ) find statistics from China unreliable.


Chinese trade data for December shows exports rose 14.1% and imports went up 6 percent from a year earlier.


The increase didn’t 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, says Bloomberg.


“Unreliable data could have a negative impact on resource allocation and business planning,” says ANZ’s Liu Li-Gang. “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.”


A report published last week by ANZ says the quality and reliability of economic data released by China does not conform with “Benford’s Law,” a mathematical tool devised by an American physicist in the 1930s.


The rule, created by former General Electric Co. (GE) engineer Frank Benford, can be used to detect spurious data based on certain patterns


The ANZ report found that quarterly GDP, industrial production, fixed-asset investment and inflation data published in percentage terms failed to conform to “Benford’s Law.”


Meanwhile, Standard Chartered Plc analysts say that the 7.4% third-quarter GDP result released in October by China was “too good to be true.”  London-based Capital Economics Ltd. said its own analysis indicated expansion of about 6.5 percent.


“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.


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, Beijing-based analysts at IHS Inc. (IHS).


Li Keqiang, who may succeed Wen Jiabao as premier in March, was quoted in 2007 as saying he watched figures on power, rail cargo and loans because gross domestic product numbers were “man-made.” Li’s remarks were in a U.S. diplomatic cable published by WikiLeaks in late 2010, according to Bloomberg.


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