The better-than-expected Chinese trade data has everyone crying foul.
Nomura's Zhiwei Zhang, Bank of America Merrill Lynch's Weijun Hu and Ting Lu, and Societe Generale's Wei Yao have all pointed to discrepancies between China's numbers and the numbers of its trading partners.
Furthermore, all point to companies using inflated bills as a way to circumvent strict Chinese capital controls and move money in and out of the mainland.
"In 1Q13, China’s export data were heavily distorted due to over-reporting by exporters who might bring in hot money through fake exports and arbitrage the differential between CNH/USD and CNY/USD by moving goods in and out of HK," said BAML's Hu and Lu.
SocGen's Yao is actually having a hard time finding people who aren't engaged in this practice.
"As for reasons, our observation from the trips to the mainland led us to believe that there is indeed a large amount of speculative capital flows," wrote Yao in a note to clients. " Nearly all corporates we met admitted that they were conducting some forms of interest rate arbitrage on the expectation of further yuan appreciation. "
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