China’s foreign trade position seems to have steadied amid the crackdown on false invoicing lurks which distorted the data for much of 2013.
China’s Customs Administration said yesterday that exports rose 0.9% year on year to $US188.54 billion, while imports were up 0.8% to $US170 billion.
In March imports fell 11.3% year-on-year to $US162.4 billion while exports were down 6.6% to $US170.1 billion, for a trade surplus of $US7.7 billion.
Some more excitable analysts claimed that was a sign of ‘China slowdown looms’, to quote a headline. But it was quickly explained as the impact of the crack down of false invoicing of exports (and some imports).
The crackdown and improved performance by exporters saw the trade surplus reach $US18.4 billion, up 1.8% from April last year, and more than double the reported March figure.
.png)
The trade data starts the monthly flow of economic figures – consumer and producer price inflation will be reported later today.
Imports were boosted by the second highest level of iron ore imports ever, record daily oil imports and a 52% surge in copper imports (from a year earlier).
Yesterday’s figures came a month after the Customs Administration reported that China’s trade volumes fell dramatically in March, which analysts then blamed on the continued impact of the over invoicing of exports seen in early 2013.
The extent of the over invoicing in early 2013 can be seen from the increases in exports in January of 25%, 21.8% in February and 14.6% in April.
.png)
The Customers Administration revealed that exports to Hong kong were down sharply – analysts pointed out that Hong Kong and Taiwan were the favoured destination for the export and import lurks which were designed to ship money into China (and then repatriate it) to take advantage of the steady rise in the value of the yuan.
Since the crackdown started earlier this year, the currency has been allowed to fall, imposing extra costs and perhaps losses on speculators, who have been cut off from their supplies of cheap offshore funding.
China had recorded an unexpected trade deficit of almost $US23 billion in February, which was blamed on the Lunar New Year holiday season at the start of the month.
That was the first trade deficit for almost a year.
China’s economy grew 7.4% in the March quarter, down from the 7.7% rate in the three months to last December and the lowest since the third quarter of 2012.
Economist Julian Evans-Pritchard with Capital Economics said, "April shipments were up 4.1% year-over-year to the US, up 7.8% to the European Union and up 5.9% to Southeast Asia".
They fell 9.7% to Taiwan and 31.3% to Hong Kong, where much of the over invoicing activity took place.
That’s why trade with Hong Kong fell 33% in the first four months of 2014.
And RBS economist Louis Kuijs said in a note that adjusted for the over invoiced overseas trade, China’s real exports look like that were up around 8% year on year.
.png)
The Financial Times reported overnight, "Analysts believe that April is the final month in which data will be distorted by rampant faked exports in the first months of 2013. But since the ministry of commerce and customs administration have refused to issue revised figures for 2013, even other Chinese government departments have had to resort to guesswork to determine the real state of the country’s export industry."
