About That "Surging" Chinese Trade Data, There Is Just One Thing...

Tyler Durden's picture

While Chinese New Year seasonals are undoubtedly one factor in last night's "surprisingly good" Chinese trade data, the following chart shows the level of "bullshit factor" was extreme by anyone's measure. Three years ago we first brought China's 'fake' trade data and abundant discrepancies to the public's attention and despite an apparent crackdown by regulators, the gaping difference between imports from Hong Kong and exports to Hong Kong is downright embarrassing for China's SAFE as it is clear that capital outflows are being disguised as exports with "over-invoicing" back in play.

Last night, China unveiled the following double-rainbow of better-than-expected trade data with Exports shockingly positive YoY (smashing expectations of a furtther collapse)...

Chinese New Year seasonals (export-boosting into year-end) and despite China importing a record amount of oil, or 33.2 million tons, the trade surplus apparently surged and everything is proved awesome in China.

But, as we initially explained in 2013, one reason for the "surge" in recent data may be the demand of the new Politburo to telegraph that all is well following the recent turmoil since the magnitude of the surprise beat  could indicate exporters’ rush to finish year-end orders and government pressure to report exports before the end of the year to reach the government’s growth target.

However, possible explanation for how Chinese companies are cooking their export books comes from none other than Goldman:

“It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones” or by exporting “earlier than otherwise in an attempt to improve the annual exports data,” Goldman Sachs’ Beijing- based economists Yu Song and Yin Zhang wrote the same day.


Rushed shipments and even faked exports to secure tax refunds may have contributed to the stronger growth data, according to Alistair Thornton and Ren Xianfang, Beijing-based analysts at IHS Inc.


Some trading companies are turning to transportation providers like Shenzhen Global Express Logistics Ltd. for help in shipping goods through so-called bonded zones to claim export tax rebates or charge higher import prices for goods without them physically leaving the country. Shenzhen Global offers customs clearing and other freight services including a “one-day tour,” Lin Yongtai, a manager with the company in the city bordering Hong Kong, said in a telephone interview.


For a fee of 1,000 yuan ($161) per vehicle per day, the company will drive trucks into warehouses in bonded zones, where cargo must clear customs, so that businesses can obtain a refund of value-added tax on the “export” of their products or boost sale prices for goods that carry the cachet of being imported.


“A poor villager can boast he has thousands of yuan of turnover every day, but people later discover he only has one bull -- he takes the bull out every morning and brings it back every evening,” Lin said. “The same applies to some parts of China’s foreign trade.

Of course, there is also the simple test of matching one country's exports to another one's imports (after all, it is a closed loop).

To wit... The massive over-invoicing "Exports" to HK relative to the smooth HK "Imports" from China...


Once more, it appears that China is literally pulling numbers out of thin air:

UBS economists led by Hong Kong-based Wang Tao pointed to a “quite obvious discrepancy” in the growth of China’s exports to Taiwan and South Korea and those economies’ reported imports from China in recent months, even as historically they have tracked each other well.

Finally, that China is openly making up numbers is no surprise: it will continue doing that until, like everywhere else, the discrepancy between perception and reality (usually manifested in the case of China by a lot of angry people breaking something or simply rioting) becomes too glaring for even the most optimistically inclined to ignore.

As Sean Corrigan noted...As Sean Corrigan noted...

Simply put, in a market that hangs on to every piece of good news like a drowning meth addict clutching at the tiniest of straws, the "over-invoicing" will continue until morale improves and optimism becomes self-fulfilling... except that has never, ever worked.

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youngman's picture

The exports that are growing in China is all the money leaving to buy homes in the Western world.....

Pool Shark's picture



If China really did export all those goods, how did they ship them?


The collapse of the Baltic Dry Index calls BS on China's numbers...


Winston Churchill's picture

Excellent point.Fax machines are great.

NoDebt's picture

Exactly.  I say that same thing and people look at me like "it's can't ALL be fake, NoDebt."  Wrong.  It's ALL FAKE.  They are a culture built on lying.  It's not even considered a bad thing- lying is just a natural part of doing business to them.  And their government is fully supportive of this behavior.

To wit:  ghost cities.  THOUSANDS of them.  


TheDanimal's picture

It's not just the lying, it's the lying combined with the high propensity to gamble.

U4 eee aaa's picture

We have found our Ferengi

NoDebt's picture

I'm guessing they turned them into liquids first.

Wild Theories's picture

chinese exports don't go out on baltic dry ships, baltic dry tracks bulk carriers, not container ships


some edumucation is desperately needed on these boards

conraddobler's picture

So under pressure people will just make shit up?


abyssinian's picture

why did the Shanghai index dropped 2% if all the BS data was so great?

SoDamnMad's picture

They exported all that sand to build those islands in order to claim sovereignty of those areas in the South China Sea.

thunderchief's picture

Since when did people start trusting the Chinese? 

Did I miss something since the Cultural Revolution and Tianamen Square? 

snr-moment's picture

yes.  you missed our conversion.

walküre's picture

It's good be a billionaire unless you happen to be Chinese

When .gov China makes the nasty billionaires disappear it is just another form of "bail-in". Surely, whatever wealth is not nailed down or inaccessible, will be confiscated by .gov under some bogus charges.

It looks totally desperate over there.

unplugged's picture

there was a time when data coming from govts was less false - people still believe we are in those times for whatever reason they believe it - currently all data coming from govt is a pack of lies - won't be long before those who still believe are bitchslapped into cold hard reality

walküre's picture

media blackouts on immigrant related problems in Sweden and Germany should be a clue of how far down the rabbit hole we are...

even BBC wasn't reporting until the dam on social media broke.

worldwide media is a conspiracy!

Arnold's picture

Media algos follow trending, kinda like sheepwalking.

Mark Mywords's picture

Another US equities rally built upon a pile of bullshit.

Par for the course.

Tinky's picture

Just like the sharply diminishing returns from QE, or recent PPT efforts, these type of phony data sets will prove to be little more than brief jolts to a dying market.

There is simply too much real data painting a more accurate picture, and it will only get worse.

youngman's picture

After copying the Hoverboard...they sold a bunch of those....and what a great toy..it burns up in a month..and you have to buy another one...ships were full of those

youngman's picture

Chinese market....is a warehouse full of Copper...that has been loaned out 200 times.....that is how they work and play the game...

U4 eee aaa's picture

Western markets loan the gold and sell the copper. Chinese markets loan the copper and keep the gold

dearth vader's picture

I already wondered how they managed to export more stuff in a steeply falling transport environment. Drone deliveries? There must be quite a lot of unicorn trails leading to HK.

U4 eee aaa's picture

Expert packaging. Like a transport zip file ;)

NeverForgetSilver's picture

World shipping capacity has increased14 folds since 1993 and 6 folds since 2000. Don't just  think about capacity demand alone, you should also think about supply. I heard that China deliberately added shipping capacity at a loss to make sure their products are not priced out of market. They can do it because they are the largest ship builder. Some of the ships if not all are registered in other countries to avoid tax. This is a common practice in shipping. This explains partially the drop of BDI since 2008.

Youri Carma's picture

China Imports Slid 8% and Exports Fell 1.4% In December
13 January 2016, (RTT News)

Exports fell 1.4% on a yearly basis in December, data published by the General Administration of Customs revealed Wednesday. It was slower than an 8% decline expected by economists and a 6.8% decrease posted in November.

At the same time, imports slid 7.6%, also slower than the expected decrease of 11%.

poland spring's picture

I would love to see next months follow up numbers.

InnVestuhrr's picture

Ahhhh, the world will be SO MUCH BETTER after the vastly superior chinese regime takes over control from the obsolete inept USA regime,

that's what the priests and followers of the shiny-shit cult keep telling us,

in addition to shiny shit being the only Supreme Galactic Value & Wealth Preserver, in spite of being down more than 40% and going down more. Must be just a blip or seasonally adjusted !

herkomilchen's picture

Love the chart quantifying the Bullshit Factor!

falak pema's picture

Thats a David Bowie song : China girl.

NeverForgetSilver's picture

All the price of imported materials are DOWN and the export price is up. If you calculate in Yuan, what do you expect? I know the suppl us will be up without even looking at the data. Those analysts who predicted worse trading data have very low intelligence, very dumb.

Dr. Bonzo's picture

Look for yourself. Not a single major container ship in port in one of the world's largest ports. There are usually upward of 50-100 mega container vessels from all the large container companies; Maersk, CMA, Hanjin, OOCL, you name it. Nothing but local coastal traders. Saw a large container carrier few days back was nearly empty. During 2008 there were about 30-40 large empty container ships parked in the harbor. Now there are none. Companies must have found a cheaper port to park them.