Exports from China increased 10 per cent in March from the same month a year earlier, compared with a 22 per cent increase in February, while imports surged 14.1 per cent in March, compared with a year-on-year drop of more than 15 per cent the previous month, according to Chinese customs administration data released on Wednesday. Total exports to Hong Kong of $48.4bn in March were almost double the $26.8bn in Chinese exports to the US, China’s second-largest export market, last month.
The apparent huge increase in exports to Hong Kong continues a trend that began late last year.
In the three months until the end of February, China’s customs reported $95bn in exports to Hong Kong but, here it comes the math problem, the independently administered customs authorities in Hong Kong reported less than $59bn in imports from mainland China, almost all of it for re-export to other countries. A similar although less pronounced dynamic appears in exports to Taiwan, with Beijing reporting an increase in exports to Taiwan of 53 per cent in January, while Taiwanese figures showed a 35 per cent increase in imports from mainland China that month.
Is the Chinese calculus different from that practiced in the rest of the world?
The puzzle can be solved looking into the Chinese reserve data.
China’s forex reserve jumped $130bn to $3.44tn in the first quarter (China’s foreign exchange reserves are the largest in the world) helping to fuel a surge in credit growth amid concerns about the level of debt in the economy.
Beijing has strict capital controls to prevent unwanted speculative inflows. But major discrepancies in Chinese export data to Hong Kong and to Taiwan, are an indication on how companies have been over-billing in order to bring more money into the mainland.
If these sets of data are fakes, what about the others?