China's Export Surge: Analysts Say Fake Export-Invoicing Skewing China’s Trade Data

Fake export-invoicing may again be skewing China’s trade data. Analysts at banks and brokerages are questioning China's export surge as the gap between China’s reported exports to Hong Kong and the territory’s imports from the mainland widened in September to the most this year.

Bloomberg reports that China recorded $1.56 of exports to Hong Kong last month for every $1 in imports Hong Kong registered, leading to a $13.5 billion difference. Hong Kong’s imports from China climbed 5.5 percent from a year earlier to $24.1 billion, figures showed yesterday; China’s exports to Hong Kong surged 34 percent to $37.6 billion, according to mainland data on Oct. 13.

The latest trade mismatch coincided with renewed appreciation of China’s currency, said Bloomberg.

“This is definitely another important piece of evidence of over-invoicing exports to Hong Kong to facilitate money inflow into China,” Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong told Bloomberg. “So we shouldn’t be too optimistic about recent export data from China.”

According to Wu Ruilin, a deputy head of the State Administration of Foreign Exchange’s inspection department, companies have “faked, forged and illegally re-used” documents for exports and imports. Almost $10 billion in fraudulent trades nationwide have been uncovered since April last year.

Bloomberg reports that China’s government noticed the rapid increase in trade of some merchandise with Hong Kong in September, Shen Danyang, spokesman of the Ministry of Commerce, said at a briefing on Oct. 16. The spokesman said the ministry will step up scrutiny and analysis.

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