By definition, exports from country A have to equal imports from country B. Unless country A is China. Then, central planning magic happens, as can be seen in the chart below showing the misreporting of Chinese exports to HK compared to HK's reported imports from China, which is just the latest nail in the coffin of Chinese economic data "integrity."
The issue, however, is that since China manipulates its data "upward", as does the rest of the civilized, "unmanipulating" world, none of the 'very serious people' have any incentive in calling China out - because suddenly all the world's growth data may fall under the microscope, as perhaps it should - after all it was less than two years ago that we observed that the entire world was exporting over $300 billion more than it was importing (numbers which should net to zero), leading us to wonder if it was aliens that were importing all the excess Louis Vuitton bags...
So for those actually interested, here is Sean Corrigan of Diapason breaking down the true numbers behind China's economy, who using real export and import data ex-manipulation and fudging, that China's reported 7.7% GDP would translate into a 5.5% Q1 GDP growth, the lowest rate of growth in 20 years!
From Diapason Securities:
Official number for China's 2-way trade flow growth in QI was + 13.4% yoy and for the first 4 months up 14% yoy.
Min of Commerce has apparently now calculated that 'real' trade - i.e. ex cheating to import hot money via the Shenzhen-HK route - reduced these to 8.6% and 9.2% ... That is, a good 5% less for each of the two periods
Given that the game was to get illicit dollars into China, the greater part of the scam is likely to have seen exports overinvoiced and imports underinvoiced, so this fiddle presumably served to greatly boost not just the trade surplus, but also the reported GDP nos.
Although the MOC estimate only talks about 2-way trade adjustments without breaking down imports and exports separately, we can still deduce that their total is to be lowered by around $44 billion (CNY280) in QI and by another $18 (CNY110) in April alone. Intriguingly, this is of the order of the widely derided HK-China import-export discrepancy which amounted to ~$50 billion in the first three months.
At the extreme, therefore, if we assume that all the fakery fell on boosting net exports (where, after all, all the incentives lie), we might begin by assuming that QI nominal GDP could have been overstated by as much as ~CNY260 billion, leaving it at around CNY11,630 bln in toto and therefore up by only 7.2% from 2012 rather than the 9.6% actually reported.
Again, if we push our assumptions to suppose that none of this changed the overall deflator, we might translate this into a direct hit to QI Real GDP of a similar magnitude, which would therefore see it drop from the already anaemic 7.7% to less than 5.5% - the lowest rate in over 20 years .... Even if the actual impact falls short of this extreme, we are still clearly due a non-trivial reduction to the count and should recall that this comes this despite a monster 6o% increase in credit, to boot.....
Incidentally, the MOC says it will eliminate much of this in the May trade figures, so watch this space.
PS: Note too the comment that some of this was done by way of gold trades, where, as we know, record official import no.s have just been reported amounting to around 370kg or $18-20 billion in value from HK. Not ALL of that may have gone to bulk up the dowries of China’s new brides, it would seem.
And the actual Chinese source data from the 21st Century Business Herald, translated
Trade urgent "dehydration" Shenzhen's foreign trade plunged in late April
[NB: 'DEYDRATION' AND 'WATER' REFERENCES REFER TO ARTIFICIAL INFLATION OF THE NUMBERS]
Song Jing Guangzhou, 21st Century Business Herald 2013-05-08 23:25:46
Core Tip: two sources have confirmed to this reporter, April 27, the Shenzhen Trade sharp decline, which will pull in Guangdong and even the country's trade growth rate to fall.
There are signs that regulators are distorted trade data "squeezed out the water.
Two sources have confirmed to this reporter, April 27, the Shenzhen Trade sharp decline, which will pull in Guangdong and even the country's trade growth rate to fall.
On April 17, the newspaper reported the abnormal growth of foreign trade of Guangdong in the first quarter, the Vice Governor Zhao Yufang Guangdong Province, in charge of foreign trade Shenzhen Jifu research. The source refers to the position in the recent State Council in charge of foreign trade high-level internal meeting to be highly concerned about the distortion of trade data.
Ministry of Commerce, told reporters on May 8, abnormal growth of the first quarter, foreign trade has aroused the attention of the regulatory authorities, a special investigation has commenced, "our calculations, if you weed out the non-normal factors, China's imports and exports in the first quarter and 1-4 it was only 8.6% and 9.2% growth. "
According to figures released by the General Administration of Customs on May 8, in the first quarter and 1-4 months of import and export growth were 13.4% and 14%, respectively.
Obviously, squeezed out the water "effect is temporarily unable to be reflected in the April trade data. Said the Ministry of Commerce said the internal trade figures for May is expected to be relatively real.
According to sources, Shenzhen April 27, foreign trade data has shrunk with the policy to suppress late April, the State Administration of Foreign Exchange and the banking supervision department of Guangdong province Bank window guidance and Risk Tips, "such as gold processing trade pledge financing of long-term letters of credit mid-April, the province has been halted. "
China State Administration of Foreign Exchange, Shenzhen Branch launched in late trade credit investigation in mid-April, banks are notified to rigorous examination of documents on trade in goods in the bonded area to prevent hot money through the cargo idle "cross-border arbitrage.
Shenzhen City Commission by letter officials told reporters on May 7, to strengthen monitoring in addition to the SAFE, the Shenzhen Customs inspection of goods also increased the intensity of Shenzhen City Commission by letter of the Futian Free Trade Zone and other special customs supervision within the enterprise monitoring and rectification.
On May 5, the SAFE issued a document required to tighten financial institutions foreign exchange position of the lower limit also requires foreign trade enterprises within 10 days explain the import and export of goods and the total trade balance does not match.
Shenzhen Futian Free Trade Zone, specialized in providing goods idling "and" Hong Kong and Macao tour "supply chain company party on May 8, told reporters," cargo idle "recently has been more difficult to operate, but the Hong Kong and Macao tour" there is space , the first quarter of this year, the company had helped a customer the same batch of rubber raw materials back and forth immigration operation 41 times.
The foregoing, the Commission by letter in Shenzhen officials reminded the measures of the current regulatory authorities are simply plugging the moment of a series of measures might be able to temporarily squeezed out trade water, do not rule out soon there will be new hot money immigration practices.
He explained that the goods idle "," Hong Kong and Macao day trips "and the use of long-term letters of credit pledged financing arbitrage practices not only exist in Shenzhen, in fact, trade provinces of Jiangsu and Zhejiang also such troubled, but Shenzhen adjacent to Hong Kong and convenient environment for the port trade exception problems are more prominent.