May 9 (Bloomberg) -- The mismatch between bilateral trade data reported by Hong Kong and China has narrowed in the last year, signaling that efforts to stop fake invoices worked and China’s April exports may have risen more than figures showed.
The CHART OF THE DAY shows a ratio of China’s monthly exports to Hong Kong based on data from the General Administration of Customs in Beijing, and the city’s imports from the mainland as reported by the Census and Statistics Department. In theory, the ratio should be at parity, and it averaged 1.03 for the six years starting in 2005, Bloomberg calculations show. It’s been skewed toward China every month in the past four years, including a record high 2.36 in March 2013, prompting skepticism from many analysts. The lower panel shows the reported data in millions of U.S. dollars.
The narrowing disparity indicates China’s efforts to crack down on fraudulent invoicing starting in May 2013, including sending warning notices to companies whose goods and capital flows didn’t match, may have had the desired effect. It also means that the trade gain reported for April was probably understated, according to a note from JPMorgan Chase & Co. senior China economist Grace Ng yesterday. Overseas shipments increased 0.9 percent from a year earlier, the Beijing-based customs administration said yesterday.
“Recent data on the discrepancy between China and Hong Kong trade figures, which was the major source of ‘fake exports,’ has continued to narrow through March,” Ng wrote. “This is not surprising -- with the CNY depreciation observed since February, the incentive for fake exports likely has come off significantly.”
Adjusting for fake exports and assuming that the discrepancy held at a similar level in April, JPMorgan estimates that April exports would have risen by about 8.2 percent from a year earlier. Hong Kong will report its version of bilateral trade later this month.
Even stronger export growth would further reduce the urgency for China’s Communist Party leaders to resort to more large-scale stimulus. The yuan, which has weakened about 2.8 percent this year against the U.S. dollar, rose 0.1 percent yesterday to 6.2280.
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