Doubts Cast on Chinese Exports
China's customs bureau reported in March that exports rose 19.8% year-to-year in the three months through February, despite a fragile recovery in the U.S. and Europe. The report has buoyed confidence that China's economy is strengthening, after growth in gross domestic product touched a three-year low of 7.4% year-to-year in the third quarter of 2012.
But some exporters, trade agents and economists said the export numbers were likely to be inaccurate because of false reporting by exporters and local governments. They point in particular to mismatching trade figures with Hong Kong, the first destination for many mainland Chinese goods.
In the three months through February, mainland customs reported $94.9 billion in exports to Hong Kong, but Hong Kong customs reported only $58.7 billion in imports from the mainland. The discrepancy during the period was greater than at any other time in recent years.
China's export growth for February could have been overstated by around seven percentage points, based on an analysis of data discrepancies, Louis Kuijs, China economist at RBS, estimated.
BusinessWeek has some more details:
Outbound shipments may have grown 7.1 percent in May from a year earlier, less than half the previous month’s reported 14.7 percent, based on the median estimate of 34 economists ahead of data due June 8. Import growth probably slowed to 6.9 percent from April’s 16.8 percent, a Bloomberg News survey showed.
I'm sure the knowledgeable posters here understand the implications of the massive slowdown of imports in May on China's export driven economy.
Economists in a separate survey last month said January-April export growth was overstated by 4 to 13 percentage points. Shipments abroad probably rose 8.5 percent in the first four months of 2013 from a year earlier, based on the median estimate of 15 economists, less than half the official 17.4 percent number. Imports may have gained 8.25 percent, according to 14 analysts’ median estimate, compared with the government’s 10.6 percent figure.
Here's an interesting tidbit:
]The slowdown may be too much for the government to stomach, said Hu Yifan, chief economist at Haitong International Securities Co. in Hong Kong, who previously worked at the World Bank. Authorities may start “active supportive policies,” including a cut this month in banks’ reserve-requirement ratio, said Hu, the only analyst surveyed to project a May decline in exports.
China’s gross domestic product expanded a less-than-estimated 7.7 percent in the first quarter and analysts last month trimmed forecasts for the April-June period to a median projection of 7.8 percent. The government in March set a goal of 7.5 percent for the year.
“The pressure on the Chinese leadership may grow to do more to boost domestic demand,” such as faster approvals of investment projects, said Sun Junwei, a Beijing-based economist at HSBC Holdings Plc. “The government doesn’t want another stimulus package, but it won’t like a deepening slowdown either.”
The above should be read in conjunction with an earlier piece of stats in the article:
The trade data from the General Administration of Customs will be followed June 9 by National Bureau of Statistics releases on prices, industrial production, retail sales and investment that are forecast to show little change from April growth figures. New yuan loans may have increased to 850 billion yuan ($139 billion) from April’s 792.9 billion yuan in People’s Bank of China numbers due over the next week, based on the median estimate in a Bloomberg News survey.
The point is - and I have always maintained this - there is much that China has done which is good, admirable and worth emulating. However, being shocked and awed by their model and wringing our hands and asking why we can't do the same is useless activity IMO.
They have had two major advantages: One is that that they had more than a decade headstart and two being a authoritarian dictatorship - which pays lip service to Communism - they have been able to ram through a lot of stuff in the guise of "reforms" at which we Indians would take to the streets and rightfully so.
It is useful to remember this when we do our regular ronna dhonna about how China=Good! and India=Bad!